This is a subject matter that probably deserves a whole site of its own.
How you utilise the savings and pensions you have built up during your working life. Once you reach retirement, there are so many different options and methods of extracting monies from your savings and pensions that you definitely need at this point to have professional independent advice. However, in planning your journey towards retirement it is best to have in mind a few significant points about the options that you will have when you reach retirement. We list a few of these points for you to consider below.
- Over the past 20-30 years legislation has changed tremendously. In the IK there has been a growing trend towards greater flexibility in the way people can take their retirement benefits. We believe that this is likely to continue as the strain on the system grows ever greater with more retired people and less working people. The flexibility and the range of options available to individuals will get greater but remember the legislation that will be relevant to you is the legislation when you come to retire. This means that whatever you do in terms of planning forward do not get caught into a trap of working with only 1 or 2 options. Make sure you have as many options available for when you get to retirement as possible.
- Although people often talk about a retirement date and often stipulate an age, for example 65, the reality is that in many cases retirement planning is best done in stages. This may of may not coincide with your own individual circumstances where for example many people do not retire any more on a single day. They may stagger their retirement moving from full time to part time or even change jobs late in their life with a view to taking a reduced salaried position with a less stressful job in their later years. There are too many possible scenarios to cover off but it is true to say that in the future many people will not retire on a single date or day. Therefore having a plan that works and allows you to stagger your retirement benefits makes great sense. Staggering can work in both directions so for example you may want to take some of your benefits at age 55, some at age 60 and some at age 65. For some people there may be pensions plans from their employer or from the state which lock in at a certain age, typically aged 65. If you were to retire at age 60 therefore, you may want your other pensions to start paying reasonable sums of money at 60 but to reduce when the company and state pensions come into play at 65.
- Not all pensions are equal. Some are more equal than others. One of the key observations from the past 10-20 years is the changing landscape of pensions themselves. 20 years ago the conservatives opened up the personal pension revolution and encouraged people to move pensions from the state and corporate sector across to the personal pension arena. This resulted in a widespread abuse by the pensions industry of the type of pension that was being transferred. It is irrelevant to this site as to who was to blame for this, the Government or the industry, but personal pensions became the big bad wolf and company and state pension schemes were seen as the only sensible option. However, in recent times personal pensions, particularly through self invested personal pensions (SIPS) have become all the rage and it is now final salary company schemes that are under pressure and being seen as uncompetitive and inefficient. The point is that the pension landscape changes and has changed radically in the last 20 years and just as soon as you think one route is the best then markets or legislation or something else changes which shifts this dramatically, Whatever happens in planning towards the point where you need to take your pension it is best to get to retirement with a number of different plans in place.
- One of the problems you have at the point of retirement in most cases is you do not know how long you have to live. If we knew how long we had to live when we got to retirement we could construct the perfect retirement plan and we would know for example whether an annuity , an income for life is or is not the best option vs other options. Because this is unknown then the various options need to be weighed up against each other and it may be that different options are run alongside one another for the benefit of risk reduction.
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