December 5, 2024
Is 2025 the year you would like to retire? How confident do you feel about your retirement income?
Retirement is a big step, and one of the concerns we frequently hear is that people want to retire soon, but aren’t sure whether they can afford to.
One of the benefits of developing a long-term relationship with an IFA is that they can help you to clarify your goals. Understanding not just when you want to retire, but how and why, along with the level of income you will need to support your retirement plans, helps you to make the decision with confidence.
Talis IFA, Rebecca Harris, says; “Many people automatically tie in the idea of retirement with State Pension age, and don’t realise that personal pension provision can be from age 55. If you are confident that you have enough funds, you can start to draw down your pension early in several different ways. It’s flexible, so can potentially support your income if you want to retire gradually – by initially cutting down your hours, for example.”
The most important step is to have a full picture of your income and outgoings now, and understand what that will look like once you are retired.
You’ll probably want to think about ways to reduce your regular outgoings, like making sure your mortgage is paid off. But also consider how retirement is going to change your spending habits. You might be spending considerably less on daily travel to work, for example, and even regular lunches and your daily coffee can add up to a surprising amount over a year.
On the other hand, once you’re retired you might find yourself spending more on social activities, hobbies or leisure travel.
Ideally you want to have a clear idea of that before you decide to retire.
You’ll also want to have the full facts in terms of your income streams. In addition to your private pension, from what age will you be eligible to receive your State Pension, and have you made enough contributions to get a full State Pension?
Your Talis IFA will guide you through all these questions and help you imagine what your financial picture will look like once you retire.
They can show you the impact on your finances of different scenarios. What does it look like if you increase your mortgage payments a little now, to pay it off a bit earlier, for example? They can also show you what impact drawing down funds now could have on the long-term sustainability of your pension pot.
Rebecca says; “I recently worked with a long-term client with multiple health issues which were forcing him to consider retirement several years earlier than planned. He’d originally hoped to go part-time, but his health condition didn’t allow that, and he was worried.
“One of the things he hadn’t thought about was WHY he wanted to continue working despite his health challenges. Once I was able to show him that, taking into account all his income and outgoings, early retirement wasn’t going to be the financial hit he’d imagined, he was able to confidently decide to retire now and enjoy life before his health deteriorated further.”
Whatever your retirement concerns, an experienced IFA will help you to clearly see what your retirement income will look like, confidently make decisions, and take the steps towards the next phase of your life.
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