The 8 Things You Should Consider About Income in Retirement

Long before you approach retirement, you need to consider how you will provide income during your later years.  What provisions have you put in place for income during your retirement?  Below are eight things that you should consider regarding income in retirement.

ONE:  The standard of living you experience during retirement is dependent upon the provisions that you make for yourself before you reach your retirement time.  Early planning and preparation for retirement can begin at any age.

TWO:     State Pension provision is based upon your national insurance contributions.  At any time in your working life, you can ask the Pensions Service to produce a pension forecast for you.  The State Pension age is currently 65 for men and 60 for women. The State Pension age for women will increase gradually from 2010, so that by 2020 it will be 65.

The increase in the State Pension age will not affect women born on or before 5 April 1950. Women born between 6 April 1950 and 5 April 1955 (inclusive) will have a State Pension age between 60 and 65. Women born on or after 6 April 1955 and before 6 April 1959 will have a State Pension age of 65.

The State Pension age for both men and women is to increase from 65 to 68 between 2024 and 2046, with each change phased in over two consecutive years in each decade. The first increase, from 65 to 66, will be phased in between April 2024 and April 2026; the second, from 66 to 67, will be phased in between April 2034 and April 2036; and the third, from 67 to 68, between April 2044 and April 2046.

THREE:  If you have a Private or Occupational pension, you should speak to the Pension Fund Manager about your entitlement.  If your private pension doesn’t reach the level of retirement income that you require, you have three options.  You can add more money to your contributions, you could draw a lower pension or you could put off drawing your private pension until you have reached the pension level that you require. 

According to current regulations, you may take 25% of your private pension as a lump sum.  You should speak to a financial advisor about whether this makes sense for your personal circumstances.

FOUR: At retirement age, it is possible to buy an annuity.  An annuity allows you to swap what you’ve paid into an investment fund for a lifetime income.  This is available from the same company that you invested your money with, or you can shop around for the best lifetime income deal.   Don’t make any decisions until you’ve got a full picture of what your investment could buy you.

FIVE:  Of course, you could always continue to work.  You are legally entitled to work until you are 65.  After this age, you may request that your employer allows you to work beyond this age.  If they do not wish to employ you past this age, they must give you six months notice of their intention.

SIX:  You need to plan for the many years of retirement.  If you stop working at age 66 and you could live 20, 30 or 40 years beyond retirement, you will need to secure an income for yourself for those non-working years.  This will require a great deal of planning in advance.

SEVEN:  Recent statistics show that the average retirement income could be less than minimum wage.  Without proper financial advice and retirement income planning, your financial future could be problematic.
 
EIGHT:  You may wish to augment your retirement income with other types of investment, depending upon your level of investment and when you start investing, your dividends may provide you with a reasonable additional income.

To discuss your options for income in retirement, contact Hanson Wealth Management today.

Hanson Wealth have offices in Boldon, Durham, Inverness, Standish and North Berwick. We have a community of independent financial advisers based throughout Scotland, England, Wales and Northern Ireland as well as a variety of services available over the telephone or via the internet. So even if you are not based near to one of our branches, we can still ensure that you will get quality independent financial advice from our IFA team.

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