If you are lucky enough to have a defined benefits pension, sometimes referred to as a final salary scheme then your pension income in retirement will be unaffected. However, for most workers with a defined contribution pension, it is a different story. While recent stock market volatility has highlighted that the responsibility lies with us to manage our pension for our retirement.
It is worth checking your defined contribution pension provider to see if they are automatically moving your funds into less risky investments the closer you get to retirement. This is known as “life styling”.
Before the 2015 pension freedoms, most people used their pension pot to buy an annuity. An annuity provides you with a guaranteed income for life. Over recent years these have become less popular as rates have fallen. Annuities are still worth considering and are worth looking at if you are in ill health.
Many people are now considering the flexibility of “drawdown” plans. This is where your pension remains invested in the stock market after they retire, and they draw a percentage of their pension fund as income. Also, this option still leaves you exposed to any fluctuation in your investments within your pension fund. So, it is important to plan early for your retirement with the expectation that you will need to take some risks on long-term investments for the chance of a better return in the future.
First of all, our team of financial advisers will help you understand the options available to you. As we are Independent Financial Advisers (IFA’s), the financial advice we provided is unbiased. This is unlike some financial advisers who offer only their own products or work from a limited panel.
The initial “getting to know you” meeting is at our cost and without obligation. Why not arrange a meeting with us today to see how we can help you plan the retirement you deserve? Meetings can be arranged at a time and location that is convenient to you.
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Telephone meetings may also be arranged. Whatever is best for you.
Finally, if you have any thoughts or views about this article, “Are you nearing retirement”, then please let us know.