PLAN YOUR RETIREMENT INCOME

Transcription

1 PLAN YOUR RETIREMENT INCOME

2 YOUR RETIREMENT STORY IS ABOUT TO BEGIN A warm welcome to Dynamic Wealth. You may be thinking about retiring in the next five years or so, or maybe you ve already started the transition. If so, this short guide will help you prepare for the exciting journey ahead. You may have heard about terms such as pension freedoms, tax free cash, annuities and drawdown. Our role at Dynamic Wealth is to make and keep things simple and to help you understand exactly what you need to know. We ll help you reflect and picture the retirement you want. By using a tool called cash flow planning we show you how the impact of the decisions you make today affect your long-term security through retirement. We then make sure you and your family have enough income to meet your needs, and achieve your retirement goals. Our society has changed and the way we can expect to live in later life is different. There is also more flexibility and choice about how to use your pension now, and other savings you may have, in the most tax efficient way. There isn t one, magic answer to the question, how can I have the best retirement for me and my family? That s because everyone s retirement journey is unique. But the good news is, we re experts in this field. We can create a plan that takes you into and through retirement. It puts you in control and frees you up to enjoy one of the most rewarding times of your life. With our combined expertise and the insights gained by working with clients through retirement many for over 25 years we ll put together the right financial plan for you. Unexpected things happen. That s OK. We ll stay with you throughout your journey as things change, and adjust the plan if we need to. We are with you every step of the way. At all times, we will be your trusted adviser. We ll help you stay true to the retirement you pictured at the beginning. Your health, happiness and family are what matters most to us. We look forward to sharing your journey, working closely and celebrating with you. CALUM CAMERON MANAGING DIRECTOR dynamic-wealth.co.uk 03

3 ONCE UPON A TIME there was a date in our 60s when work stopped. We waved goodbye to our employer, collected our long-service gift and spent the next decade (more if we were lucky) as a pensioner. Most of us had final salary pensions from our employer. We knew how much we d get each month after we retired. It lasted until we died. Simple! Some people didn t have a final salary pension. They paid a regular amount of their own money into a pension. The money was invested in the stock market through funds. They didn t know how much they would have when they retired, because everything was dependent on how the funds performed. When they retired, they used the money they d saved to buy an annuity. This gave them a guaranteed, set amount of income for life. A handful of well-informed people may have chosen to stay invested in funds after they retired, where appropriate. They didn t need to buy an annuity because they already had enough to live on. If they took money out of their funds, it was called income drawdown. They needed a special product to do this. The government sensibly limited the amount people could take, to stop them running out. And let s not forget the state pension. It was easy. We knew we d have money coming in until we died. THE WORLD HAS CHANGED However, there wasn t much flexibility and there wasn t much choice. We re living longer. So, it s started to get more expensive for the government, pension schemes and annuity providers to give us guarantees for life. The age we can get our state pension is going up and it s likely to go up further in the future! Final salary pensions are now disappearing, and most people save with an invested pension now. The income people can buy with an annuity has fallen. Many people don t think being locked into a set amount each month suits how they want to live their life. Particularly if they happen to make their retirement decision when interest and annuity rates are at an historically low level. ALONG CAME PENSION FREEDOMS w, we can choose how to use the money we ve saved in our pensions. We can take as much as we want, whenever we want after 55. And we don t have to buy an annuity. The government has given us more freedom, but there can be pitfalls around paying too much tax. Put simply, the buck stops with us to make sure we don t run out of money. 04 dynamic-wealth.co.uk dynamic-wealth.co.uk 05

4 DESIGN YOUR PERSONAL RETIREMENT STRATEGY Lots of people today don t relate to that once upon a time view of retirement. Maybe you don t either. Together we can explore how your life may change and what you want from it. WORK IN RETIREMENT - ARE YOU RETIRING FROM OR TO SOMETHING? Perhaps you want to scale back work. For some people this means a career change. Other people turn a lifelong passion into a new business venture. Maybe you ll give up work completely and focus on your hobbies, charity work, family and travel. HEALTH AND WELLBEING People are living longer, in many cases, longer than they think they will. After you ve retired, you could live a healthy life for another 20 years or more. The longer we live the more we have to focus on the possibility of getting ill and needing care. Focusing on your own well-being in retirement CHANGING FAMILY RELATIONSHIPS It can take a while to settle into your retirement rhythm. The relationship with your partner may have to change. Your parents could be dependents. t the children. You ll probably deal with bereavement and inheritance issues - and start thinking about your own legacy. WHAT DOES THIS MEAN FOR YOUR FINANCES? Your spending pattern will change over time and your income must support it. You don t want to run out of money, but you don t want too much left over and to have regrets about missed experiences. So, planning is crucial. YOUR STRATEGY We make sure we truly understand your life and what matters most to you to inform the decisions you make and the action you take. And we review your plan every year with you. If life throws up new challenges, we ll adjust your financial plan. Involving your family is essential. We ll help you think about your later life plans and be prepared for the possibilities of long-term care needs. We ll make sure you understand how a Power of Attorney can protect you and your family s wishes. We ll design an investment and withdrawal strategy that fits your unique retirement journey and delivers your income in the most appropriate and tax efficient way. is key. 06 dynamic-wealth.co.uk dynamic-wealth.co.uk 07

5 TOGETHER WE LL HELP YOU UNDERSTAND What you specifically want from your financial plan How much is enough what you realistically need to live on when you retire and how this may change as you go through the different phases Your personal income plan we ll look at the guaranteed income sources you already have, like final salary pensions, state pensions and annuities How much more income you need from funds invested in pensions you pay into, ISAs and other investments to meet your overall income needs The most tax efficient way to achieve this additional income How much investment return you need to meet all your needs The investment risks that you re comfortable to take with your portfolio How inflation can affect retirement planning and the future buying power of your money How your health status at any point in your retirement might affect the best way to use your pension fund How long you might expect to live and plans for later life if you live for longer than you think (longevity risk) Whether you have enough to support your retirement after we ve considered everything How much you could afford to lose if your investments dropped How important it is for you to pass on any of your retirement wealth once you ve gone The importance of wills, Powers of Attorney and the structure of property deeds MAKE YOUR RETIREMENT REAL Retirement products are important, as tools in our kit-bag to help bring your plans to life. The starting point for great planning is to know what matters most to you in retirement and what you are aiming for. Products like pensions, drawdown and annuities can be hard to get your head around. But we simplify them and make them easy to understand. At Dynamic Wealth, we have extensive experience and a proven track record of helping clients plan with confidence and make the most of their retirement. We use our expertise and experience to help you select the most suitable solutions to meet your specific needs and objectives, so you can have your best retirement. 08 dynamic-wealth.co.uk dynamic-wealth.co.uk 09

6 HOW YOU CAN TAKE YOUR MONEY ONCE YOU RETIRE Pension freedoms have opened up options for how we can use some retirement products. Look at the table to see some options at a glance. THE MAIN ONES: Don t do anything. If you have pension savings, you can keep them invested until you need income. There are tax advantages to using other types of savings for retirement income first Keep your pension savings invested and take money out when you need income. This is called flexi-access drawdown. You may need to move your money into a new pension to do this Cash in all your pension savings and take the lot. You could end up paying a lot more tax if you do this Mix these options to meet your specific needs Use your pension savings to buy an annuity. This gives you a secure income for the rest of your life ANNUITY FLEXI-ACCESS DRAWDOWN TAKE THE WHOLE LOT MIXTURE Can I take tax free cash? Yes Yes Yes Yes Can I have regular income? Yes Yes Yes Is my income guaranteed? Yes Only if you use an annuity Can I continue to invest in the stock market? Yes Yes, but not in the same tax efficient product Yes, if you use flexiaccess drawdown Can I run out of money? Yes, but our financial planning and review service protects against this Yes but to take this option you re likely to have other income t if you use an annuity Will I pay more tax? We ll make sure your financial plan works so you pay the least amount of tax We ll make sure your financial plan works so you pay the least amount of tax Probably if you take it all at once, you may go into a higher tax bracket We ll make sure your financial plan works so you ll pay the least amount of tax Can I be flexible with the amount I take and when? Yes You can be flexible with how you use it Yes Can I pass any money that s left to my family once I m gone? Yes, and it s excluded from inheritance tax Anything that s left will be part of your estate and included in inheritance tax Yes anything that s not in an annuity 10 dynamic-wealth.co.uk

7 To find out how we can help you live the life you want, join us for a meeting today info@dynamic-wealth.co.uk dynamic-wealth.co.uk 11 Nursery Court, Kibworth Harcourt, Leicester LE8 0EX Dynamic Wealth is a trading name of Fairstone Financial Management Limited which is authorised and regulated by the Financial Conduct Authority, FCA Register Number , Registered in England Registered Office: 1 The Bulrushes, Woodstock Way, Boldon Business Park, Tyne & Wear, NE35 9PF.