With so much talk about pensions and your freedom to draw down your savings and cash in your annuities, we asked top financial planner to give us some clarity.
George Osborne’s pension reforms have been hailed a huge success. The reality is that many of the people I see are unsure what to do and are in danger of losing their life’s savings and pension pots. It’s a sad fact that pension fraudsters are targeting savers’ nest eggs with dozens of scam websites being shut down by authorities daily. People have some big choices to make – a wrong move could land them with a whacking great tax bill and at worst penniless. More so than ever before I would recommend you seek professional advice if you want that ‘Dream Retirement’ that you have worked and saved for.
Picture yourself cruising the Caribbean, eating leisurely lunches with your friends, or even simply having the time and freedom to look after your grandchildren. Retirement seems heavenly doesn’t it? But can you actually afford it?
In terms of money, your required retirement income will be different to everyone else’s, because your life is different to everyone else’s. Rather than accepting the hand that you are dealt, like so many people do, make sure you know how much money you need and how you can best generate it.
Try out my 5-point plan to help you arrive at your ‘dream pension pot’.
1. Create a retirement budget, so you know what your essential and your luxury expenditure will be. Only once you know this, can you plan.
2. Build a Lifetime Cash Flow Forecast to tell you whether you have accumulated enough or are saving a sufficient sum to deliver that required income. A Financial Adviser can help with this, but there are also free templates available to download online.
3. Make sure the money you have saved for your retirement is delivering the best return possible for a level of risk that you are comfortable with.
4. Don’t have all your eggs in one basket, so make sure you don’t just have property, shares or cash, as otherwise you will get a nasty shock in the future.
There is no time like the present to plan your ‘dream retirement’
At the end of the day, wealth is important, but time is our most precious resource; without it no amount of money, love or fast cars will benefit you. Retirement creates a huge shift in what you do with your time.
Some people excel and some curl up and give up. In my mind, there are several very clear steps you can take to maximise your time and create a dream retirement:
My top pieces of advice for building the ‘Dream Retirement’.
1. Build the ‘Bucket List’ of your dreams, so that you have some exciting plans. It could a safari in Africa, an underwater adventure in Caribbean or even buying a property on the Cornish Coast. The important consideration here is to document your goals so that you have something clearly written to follow and aim for.
2. Make sure you know what your purpose is in retirement, as otherwise you will feel rudderless. Why not use your retirement to study the subject you always dreamt of? Or take up a creative hobby that you’re passionate about? There are so many local groups and organisations that would benefit from your time and give you a very fulfilling purpose in life.
3. Design your ‘Ideal Retirement Week’, so that you have a clear structure. Of course there will be certain things like cleaning and house maintenance to factor into your retirement, but you should also plan your week around you and your personal goals. Don’t take life too seriously. Set time aside to enjoy the things you like to do.
4. Incorporate some healthy activities into your time, to make sure you have the wellbeing to enjoy the activities you’re passionate about.
BUILDING BUCKET LIST
Remember, your retirement is the time to do those things you have wanted to do all your life. My advice is to go through magazines and papers and cut out pictures which will inspire you to create the ‘dream bucket list’.
Remember with so much change happening in the pensions arena ensure you speak to a professional pensions planner and advisor before cashing in any pension pots or making any rash decisions. Don’t waste a lifetime of saving by making the wrong decision now.