5 reasons to seek financial advice in retirement
This content is for information purposes only and should not be taken as financial advice. Every effort has been made to ensure the information is correct and up-to-date at the time of writing. For personalised and regulated advice regarding your situation, please consult an independent financial adviser here at Castlegate in Grantham, Lincolnshire or other local offices.
Retirement could last 20 years or more depending on your retirement date and how long you live. Seeking financial advice can help you get the most from these years – maximising your savings and income. Below, our team in Grantham offers five reasons to consider working with a financial adviser in retirement. If you want to discuss your financial plan with us, please get in touch to arrange a no-obligation financial consultation, at our expense:
01476 855 585
info@casfin.co.uk
#1 Planning expenses
Your outgoings in retirement can look very different to those during your career. For instance, the mortgage will (hopefully) be fully repaid – taking away a large monthly expense. Commuting costs also disappear. Your adult children no longer live with you, having households of their own to run. However, healthcare costs might be higher in retirement as people deal with more aches, pains and other common conditions. You might spend more money on hobbies and travel, too. A financial adviser can help you plan for these expenses and ensure that you have sustainable retirement savings to meet your needs over the years.
#2 Maximise income
Are you set to get the best retirement income available to you? According to several studies, many soon-to-be UK retirees face quite a considerable pension shortfall. Financial advice can help you avoid running out of money in retirement. The earlier you plan, the better. For instance, perhaps you could combine income from your State Pension, workplace pension(s), your personal pension and rental income (e.g. from a buy to let property) to help you gain the best income. In 2023, according to the Pensions and Lifetime Savings Association, a single person needs approximately £37,300 per year for a “comfortable” retirement. About £10,900 a year is required for a minimum living standard.
#3 Tax planning
Without careful planning, your retirement savings could be needlessly eroded by taxes. By using tax-efficient strategies, a financial adviser can help you minimise your tax liabilities. For instance, retired people often still need to pay income tax on their income. In 2022-23, up to £12,570 can be earned from your State Pension, income drawdown and other sources (e.g. rental income from a buy to let property) without paying income tax. However, the 20% rate applies on income above this until £50,271 (at which point, the 40% higher rate applies). A financial adviser could help you save on needless tax – e.g. by helping you avoid inadvertently entering a higher threshold.
#4 Investment management
Many people in retirement will be taking an income from a pension which is invested in stock markets, bonds and other assets. The value of the pension will, naturally, rise and fall over time as markets fluctuate. Managing the emotions involved with stock market “crashes” in particular, can be very challenging. Working with a financial adviser can help you to maintain a long-term perspective and avoid impulsive decisions that could harm your investments (e.g. panic selling). If your portfolio becomes unbalanced over time – e.g. due to varying performance in your bonds and shares – a financial adviser can also help you decide which investments to buy/sell, putting your asset allocation back in line with your risk tolerance and financial goals.
#5 Inheritance tax planning
What will happen to your pension and wider wealth when you die? Having a will helps to protect your wishes after your passing, ensuring that your possessions go to the right people and in the right manner. A financial adviser can direct you to some tax-efficient strategies to help keep as much wealth in the family as possible. One idea may be to use the Residence Nil Rate Band to pass down the family home to “direct descendants” (e.g. your children). This can allow an individual to “expand” his/her IHT-free allowance from £325,000 to £500,000. A married couple or civil partnership, moreover, allows individuals within the couple to transfer any unused allowance to a surviving spouse/partner. In theory, therefore, this could allow a couple to pass down £1 million to their children without facing IHT.
Other ideas to mitigate IHT include passing down wealth via a pension pot (which is not subject to IHT), using your Annual Exemption to make IHT-free gifts (up to £3,000 per year) and leaving money to charity – which can lower the “normal” rate of IHT from 40% down to 36%. Sometimes, the best way to reduce a future IHT bill is simply to spend your money and get your taxable estate under the threshold. Perhaps you could go on the holiday of a lifetime or enjoy lavish experiences – e.g. flying business class for the first time. Speaking with a financial adviser can help you determine some of your best options for reducing IHT and passing down a more meaningful legacy to your loved ones.
Conclusion & invitation
If you are interested in discussing your own financial plan or investment strategy with us, please get in touch to arrange a no-commitment financial consultation at our expense:
01476 855 585
info@casfin.co.uk
