13 Nov What is your greatest investment?
Retirement Planning and Pensions
It is news to some, but not all, that outside of their home, their greatest investment is the cumulative value of their pensions. There always seems to be much in the financial media about retirement planning – it’s increasingly unlikely that the State Pension will be able to provide anything more than a subsistence allowance, whilst large employer pension schemes based on final salaries have significant deficits. Similarly, public sector schemes are feeling the strain with talk that generous pensions will have to end as the costs potentially increase.
This all sounds very doom and gloom – Is the pot you have big enough? Have you lost track of older plans altogether? Could you be investing more efficiently and effectively to maximise your pension when you do retire?
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Pension planning, particularly with multiple schemes accrued from several jobs can be complicated and rules change, so even if you thought you were on top of it a few years ago, you may not be now. Also, as you get older and retirement draws closer, you may probably wish to change your investment strategy to reduce the amount of risk you are exposed to.
Take stock of your current financial provision
Do you fall into any of the following:
- Lost track on all of your various pensions, that may have conflicting investing strategies
- Different restrictive maturity dates, on multiple pensions that are now disjointed
- Unsure what you are destined to receive from your pensions in the future, and if it will be enough to meet your income needs in retirement
- Don’t regularly check the performance of your investment funds
- Not really sure about the level of risk you are exposed to within your current funds
Undertaking a pension review can help you to better understand your current provision and help you to make adjustments to improve your provision for your retirement. You may then wish to consider pension consolidation, if that is a suitable option for you. Fees, charges and unfamiliar costs within your current arrangements, can be compared alongside advice costs, and the difference that could make over the next 5-30 years. It’s important to remember than some pensions can have valuable guarantees or other benefits (e.g. life assurance) that could be lost on switching. This needs to be considered carefully when reviewing your provision, and build a picture of your current arrangements projected to pay at maturity, compared to projections of recommendations.
How much are your finances at risk?
Understanding your attitude to risk is key to building your personal investment portfolio, and as you get older and retirement draws closer, you are likely to want to reduce the level of risk you are exposed to. Psychometric tests can determine your personal risk tolerance and aid your financial advisor in tailoring your investments based on your attitude to risk and stage of life.
Working with your financial advisor – make a plan
Working with a financial advisor to assess your current provision, review your attitude to investment risk and adjust your investment strategy will help you to feel confident that you are on track and ready to retire, whenever that may be, in five, ten or even twenty years time. Whilst each individual should seek professional financial advice, If this is of interest to you, we can help you navigate through the different steps you can take to start to put your retirement plans back on course.
THE VALUE OF PENSIONS AND INVESTMENTS AND THE INCOME THEY PRODUCE CAN FALL AS WELL AS RISE. YOU MAY GET BACK LESS THAN YOU INVESTED.
PAST PERFORMANCE IS NOT A GUIDE TO FUTURE PERFORMANCE. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.