Mastering Planning for Retirement: A KGJ Guide to a Secure Future

What are you going to do for money when you retire? It’s a simple question but one with a much deeper answer than you may at first think. Many people would be likely to answer, “I’ll have my state pension,” but is that enough? Do you know how much your pension will be worth at retirement? How much will you be able to withdraw every week or month? Will it be enough for you to continue to enjoy life at the standards you’ve come to expect?

It’s a lot to think about. But if you’re only just waking up to the realities of planning for retirement, you can rest assured that you’re not alone. Here at KGJ, we have over 50 years of experience in helping people in all manner of financial decisions and plans, including robust advice on a range of pension options. In this blog, we’re going to be looking at the kind of considerations you need to make in order to enjoy your later years to their full potential.

Understanding Your Retirement Needs

First things first, do you know yet at what age you plan to retire? For most of us, retirement age for the state pension is currently set between 66 and 68 years depending on date of birth but may change again in the future. Is early retirement something you talk about but haven’t planned for?

Do you have any private pensions? Since 2012, many people have been paying into a workplace pension too, unless they opted out. The crux of the question is, do you have enough money from your combined pensions to continue living life the way you’re accustomed to once you retire?

Assessing Your Current Financial Position

Effectively planning for retirement starts by evaluating your current financial situation. Compile a list of all your assets, including savings, investments and property, alongside liabilities like loans and mortgages. Assess your monthly cash flow by reviewing your income and expenses. This overview helps identify how much you can allocate towards retirement savings and pinpoints areas for financial improvement.

Understanding your financial situation is crucial for setting realistic retirement goals and choosing the best strategies to achieve them. Once you understand where you stand, you can start looking at your pension options, how much you pay in and whether you’d like to start a private pension too.

Investment Strategies in Planning for Retirement

As well as paying into a pension, have you ever considered how your money could be invested to provide a lump sum later in life? Understanding the basics of investment as part of your retirement planning can make a significant difference. When you contribute to a private pension, that money doesn’t just sit in a savings account; it’s typically invested in a range of assets like shares, bonds and property to help it grow over time.

Your pension provider will usually take on the task of investing these funds according to the plan you’ve chosen, balancing risk and potential returns as your retirement nears. If you’re looking for more control over how your pension is invested, or if you want to potentially increase your returns, you could consider a more hands-on approach with options like a Self-Invested Personal Pension (SIPP). Understanding these choices is crucial, and it’s equally important to recognise that all investments carry risk – the value of your pension could go up as well as down.

Maximising Your Pension Pot

Before we get ahead of ourselves though, let’s focus back on what you can do with your existing pension to maximise the amount of money you could receive when you retire. Now it’s important to differentiate here between something like the state pension where the amount you receive is defined by the government (£221.20 a week at the time of writing, for those receiving the new state pension) and workplace and private pensions.

There isn’t much you can do to change what your state pension will pay out, save for ensuring you’ve made enough contributions in National Insurance over your working career – something you can check on the government website. But for workplace and private pensions, there are things you can do to maximise your pot.

• Contribute More During Peak Earning Years: If you find yourself working hard and earning a good wage, you may be tempted to expand your spending. But give some thought to putting some of this cash into a private pension – you may be very glad you did later in life.
• Review Your Pension Annually: Don’t leave planning for retirement to chance. Check in on your pensions and keep track of performance and fees. Talk to experts regularly and make informed decisions about potential changes in investment options or contributions.
• Diversify Your Investments: Spreading investments across different asset types such as shares, bonds and property diversifies your portfolio but also balances risk against potential returns. It is crucial for reducing losses in one market by potentially gaining in another.
• Consolidate Old Pensions: After a certain date, every employer you’ve worked for will have set you up a workplace pension, unless you opted out. Your pot will grow more quickly if you consolidate all your workplace pensions into one pot than if you keep them separate.
• Tax Considerations: Contributions to your pension are made before tax, meaning every £80 you put in could become £100 in your pension pot, thanks to 20% tax relief. Understand tax so you can strategically plan your contributions and maximise your retirement savings.

Planning for Retirement: Consulting with Retirement Planning Experts

Whatever your age, planning for retirement without a clear strategy is full of uncertainties. At KGJ, our retirement planning experts will clarify the process for you. Whether it’s understanding pension options, optimising your investments or effectively planning your withdrawals, we’re here to provide tailored advice that ensures your retirement is as comfortable and secure as possible.

Don’t navigate the complexities of retirement planning alone – partner with KGJ for a strategic approach that secures your hard-earned retirement. Get in touch today by calling 01384 390909, emailing enquiries@tpitdev1.uk or by visiting our contact page to start the conversation and take a positive step toward a secure and peaceful retirement.