Frequently Asked Questions: Retirement
The pandemic forced many of us to revaluate our priorities – however, planning for retirement is something that remains important no matter what. As people have emerged from lockdown with changes to their employment, financial and health circumstances, it’s important to get your retirement questions answered by an expert.
- I want to retire soon. Where do I start?
Retirement is a hugely important decision to undertake, and it is imperative that professional, independent financial advice is sought. By speaking with an Independent Financial Adviser, you will be asked several, searching questions about what really matters to you once you give up work. The type of retirement you wish to have, as well as what happens to your wealth in your twilight years, should not be underestimated. There is a plethora of options available to individuals regarding retirement incomes. With the help of an IFA, we can advise you toward the best course of action to ensure your aims and objectives are met.
- I’m having trouble completing my retirement application form. What should I do?
Retirement application forms can be extremely confusing and seem rather laborious. Having had several years of experience on completing such forms, gpfm can assist you in completing the correspondence, so the paperwork is submitted accurately the first time.
- What are my options at retirement?
As previously mentioned, there are a number of options available to individuals once they reach retirement age. How an individual envisions their retirement will ultimately dictate what type of income they receive throughout it. A client’s attitude to risk, their capacity for loss and their outlook for the next 15–20 years all must be taken into consideration. With the assistance of an experienced IFA, all the various options can be explained which allows the client to make an informed decision.
- I’ve moved overseas. How will my pension be paid?
A number of pension providers can facilitate the payment of a client’s income to bank accounts both here in the UK and abroad. Everyone’s personal circumstances must be taken into consideration, and gpfm can assist in making sure a client’s retirement income is paid where the client wishes – be this in the UK or overseas.
- What is Flexible Retirement?
Flexible Retirement is more commonly known as Flexi Access Drawdown and refers to a vehicle which allows a known income to be paid at a level and frequency decided by the client. With the assistance of the IFA, the level of income can be decided to meet the retirement income (and lump sum) objectives. The IFA should also provide a Cashflow analysis which provides an indication (using a few assumptions) to the longevity of the portfolio throughout the client’s retirement. Specific milestones and one-off withdrawals can be built into the analysis, which can provide clients peace of mind that they can have the type of retirement they want – without running out of money!
- What’s the earliest age I can retire and start taking my benefits and savings?
Current legislation states the earliest an individual can retire is 55 years old (some occupations allow earlier retirement – the police force, nurses, professional football players etc). However, from 2028 this age is increasing to 57.
- When and how will I be paid my monthly income and lump sum?
The type of income in retirement option you take will depend on the frequency and method of the payment chosen. Some plans, once implemented, cannot be altered so the frequency and level of income cannot be amended. However, there are arrangements which can facilitate a flexible income plan where the date and level of income (and lump sum) can be amended and therefore the client retains control of this.
- What if I want to carry on working after I retire?
Yes, you can continue to work once you retire. However, the income derived from your retirement portfolio (unless paid to you via the Tax-Free Cash entitlement) is taxed as if you had earnt it – therefore making it subject to income tax (but not National Insurance). The taxable income from your pension must be included within your tax return.
This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions. Investments can go down as well as up and you may get back less than you invested.
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gpfm are an independent financial planning company dedicated to the provision of personal, professional, and objective-driven advice for our clients. We have been awarded the Chartered Financial Planners title by the Chartered Insurance Institute for offering high quality, independent and informed advice that meets the needs of our clients.