Many new clients are often embarrassed about how little they know about their current investments, but I would say that often clients have very little financial knowledge so I thought it could be useful to go through some typical scenarios.
Retirement planning is a key area that we work in and many clients who have approached us at this stage have a collection of different policies with very little knowledge about them or how they can take the benefits. Often they are looking to consolidate Personal Pensions.
Individuals often don’t realise that care needs to be taken when consolidating Personal Pensions as each Pension is different and it could have a guaranteed investment growth or guaranteed annuity rate which are worth keeping. But with Pensions it’s not just about the underlying Investment funds, there is often the tax implication to consider when deciding how to take the benefits. Yet it’s not just income tax but also lifetime allowance charges, so sometimes the simplest route is not the most tax efficient.
The starting point with retirement planning has to be how much income you need at retirement and then projecting ahead and ensuring that this level is sustainable with the current investments. Annuities are often ruled out but another of my key phrases is that when you make any financial decision you should look at all the options and I think annuities can still have their place for covering basic expenditure needs in retirement. The guaranteed income they provide can also give a person some peace of mind, especially in times of market volatility.
Looking at the entire portfolio of holdings is key and then putting the equivalent of a business plan together about how to fund your income needs. Also it doesn’t stop there, reviewing them and tweaking them on an ongoing basis is also important, for example in the current climate of market instability, if you are taking income for a drawdown pension and have a large amount on deposit, one consideration may be to use your funds on deposit instead to fund your income needs. If you are approaching your retirement and would like to have some help why not pick up the phone today and book a free without obligation consultation with us.