How much to retire page

Invest for income

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What is Investing for Income?

Income investing is often thought of as a way of creating an income in retirement. It is also a valid strategy to generate an ongoing stream of income at any stage of an investor’s life – whether that’s to boost your existing income, to accommodate for unexpected life changes, or to cover a known expense such as a holiday.

Investing for income involves investing a capital sum, from which you then make withdrawals at regular intervals (e.g. monthly or quarterly). These withdrawals may be for

  • a fixed amount – a set monetary amount that doesn’t change over time, or
  • variable – for example, taking the ‘natural income’ generated by the investments depending on your requirements. Depending on the amount you withdraw and market conditions, the original capital sum may be left untouched or reduced over time.

Ellis Bates Financial Advisers Income Portfolios

At Ellis Bates, we appreciate that every client is different, and as such you need a portfolio to meet your individual circumstances. We provide a range of portfolios to suit different attitudes to risk and objectives, whether it is for capital appreciation, income generation, or a combination of the two.

If you require a regular income, our Income portfolios may be an ideal investment strategy.

Our Income portfolios are invested in a diversified range of assets (e.g. bonds and equities), by geography/region, company size, investment style and fund house, among many other considerations, to ensure that the income generated by your portfolio is not reliant on any single area of the market.

We seek stable investments that are paying out relatively reliable dividends on a regular basis.

That said, in our view, it is important to look beyond the yield. This is because companies generally set their dividend as a monetary amount.

If a company is paying £1 in annual dividends and its share price is £25, then its dividend yield is 4% (i.e. £1 / £25).

However, if the share price falls to £10 for whatever reason, the dividend yield is now 10%.

If this share price fall relates to something fundamentally weak with the company, then this may not bode well for the dividend, which the company may need to cut or suspend entirely in order to shore up its finances until conditions improve.

One key consideration is debt levels (also called gearing or leverage). Companies with higher levels of debt may struggle to keep paying a dividend over the long term, particularly if that debt is being used to pay the dividend. As interest rates rise, the debt may become much more expensive to service, which could put the dividend under pressure.

Each of our funds must make distributions every six months or more frequently (e.g. quarterly or monthly), so that we can pass these payments onto you on a regular basis, as needed. If you choose to withdraw the natural income from your investments, the amounts may fluctuate over time due to these differences in the distribution frequencies.

As well as paying a dividend, our blend of funds has the potential to deliver capital growth over the medium to long term.

Our Investment Services

We put you, and what you want your money to achieve, at the very heart of everything we do. The most important part of our investment philosophy is listening to your dreams and aspirations. Find out more about our investment services and see how our in-house Investment Team can help you.

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Saving for retirement

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Retirement planning can seem complex and overwhelming. We have some top tips that you might want to consider if you are planning for your retirement:

  • Use online tools and our retirement calculator to assess your retirement planning progress
  • Consider any tax implications if you are thinking about taking money from your pension too early
  • Visit the governments free State Pension forecast tool to understand your expected State Pension –
  • Top up your pension as much as you can before you stop regular income
  • Check you are up to date with any changes in the law or regulations that may affect your retirement and pension savings
  • Seek professional financial advice

Read our article on “how much do I need to retire?” for more information on retirement planning.

Retirement financial advice

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Financial advice is very important when you retire because it is key to making sure that your investments and pensions are held at the right risk level to make sure it is sustainable for your retirement. Read our latest article on “how much do I need to retire?” for more information.

Retirement Calculator

Try our retirement calculator and receive a personalised retirement report in 5 minutes which will help you consider your emotional and financial needs in retirement and explore the different ways you can fund your retirement.

Financial Advice

If you would like to speak to one of our expert Financial Advisors about planning for your retirement, then please get in touch

How much do I need to retire?

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Retirement planning can seem overwhelming, especially when you don’t know where to start. But guidance from a professional Financial Advisor can provide peace of mind and help you create a holistic, comprehensive financial plan to achieve your retirement goals.

As you enter your 50s and 60s, retirement becomes a reality. It is essential to consider “when can I retire?” and “how much do I need to retire?”.

Remember that individuals aged 55 or over can start taking money from their pension. Starting from 6 April 2028, the average minimum pension age will increase to 57. This change may affect you differently depending on your birthdate.

It is worth considering whether taking money at this stage is necessary for your circumstances, as it may impact any tax implications. Ultimately, careful planning and consideration throughout life will help ensure that you have enough money saved when the right time comes to retire.

You should also ensure that you are up to date with any changes in the law or regulations that may affect your retirement and pension savings. As well as seeking professional financial advice, it is a good idea to keep an eye on government announcements and stay informed about news related to pensions and retirement. This can help ensure you receive the best returns for your investments when the time comes to retire.

  • Determine your retirement goals and assess your progress using online tools and our retirement calculator.
  • Be cautious about taking money from your pension too early, as there could be tax implications.
  • Use the government’s free State Pension forecast tool to understand your expected State Pension.
  • Top up your pension as much as possible before stopping regular income.

Expert Financial Advice

The journey towards and through retirement differs for us all. Our Financial Advisors will work closely with you to help you outline your retirement objectives and create a robust plan to get you there. To find out more or discuss how one of our Financial Advisors can help you, please get in touch.

Important information: This guide does not constitute tax or legal advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). the value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

How can we help you?

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Ellis Bates may use these details to contact you about our products and services. You can unsubscribe from these communications at any time. For more information, check out our Privacy Policy.

How much money will I need to retire

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The earlier you start retirement planning, the better, tut it’s never too late to think about saving for retirement – even if you are planning to give up work in just a few years’ time, you will have options to add to your nest egg.

Start your retirement planning journey today and contact us to discuss your vision for your retirement.

Financial Freedom

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Professional financial advice matters by helping you make informed decisions about how to best allocate your resources.

Financial planning is a crucial step towards achieving financial freedom and security. By taking the time to thoroughly evaluate your needs and personal goals, you’ll be able to make informed decisions about how to best allocate your resources.

With a comprehensive professional financial plan in hand, you’ll have the confidence and peace of mind to pursue your short-term goals and work towards your long-term future. With professional guidance, you’ll be inspired to realise that you have far more resources at your disposal than you ever imagined.

Early retirement

According to a recent study, UK consumers who receive professional financial advice can expect to retire on average three years earlier than those who do not seek professional advice, with advised consumers planning for retirement at age 66 as opposed to non-advised consumers who expect to retire at 69[1].

This underlines the positive impact that professional financial advice can have on retirement preparations, with those who seek advice feeling better equipped for their later years. The study identified that twice as many people who seek financial advice create a detailed spending plan in retirement compared to those who don’t take advice, with 45% of advised people falling under this category as opposed to 18% of non-advised consumers.

Enjoying retirement

Financially advised consumers expect to fund their retirement for a longer period, with an average of 23 years, compared to 17 years for non-advised people before pertinent cutbacks must be made. In addition, the study reveals that financial planning tends to be beneficial for people already in retirement.

Almost all (96%) of wealthy retirees who did a great deal of financial planning or just planned their finances slightly say they’re enjoying their retirement, dropping to 72% among those who have done no financial planning.

How much do I need to retire

Regrets for non-advised retirees are more pronounced, with the majority stating that they require more money in retirement compared to their original estimates, and that they wished they had planned more thoroughly, compared to advised people.

Despite having a higher household income, 23% of wealthier pensioners, with an income of between £40,000 and £49,999, wished they had planned more thoroughly, indicating that the value of advice remains consistent regardless of income.

Retirement Planning Services

Planning for retirement can be overwhelming, leading to several considerations, making financial advice crucial for people to feel more confident and prepared about their future. The research results underscore the significant variation between the retirement plans and experiences of those who have taken advantage of financial advice and those who haven’t.

The research findings demonstrate the value of professional financial advice in terms of the retirement age and the enjoyment of one’s retired life. Start planning today, and take the first step towards a brighter tomorrow.

Financial Planning Services

Financial planning can certainly feel complicated at first glance, but with the right guidance, it can be a smooth and stress-free process. At every step of your financial planning journey, we’re dedicated to providing you with accessible financial advice to support you in making informed decisions about your finances.

Cash Flow Forecasting

Our Financial Advisers use sophisticated cash flow forecasting software which helps you to visualise your expenditure, income and preferred lifestyle. It also allows us to simulate different scenarios and stress test how much financial resilience you may have to factors outside of your control, such as life events, economic changes and volatile markets.

If you have any concerns about your financial future or would like to find out more, please contact us.

Source data: [1] Boxclever conducted research for Standard Life among 6,000 UK adults. Fieldwork was conducted between 6 Sept–16 October 2022. Data was weighted post-fieldwork to ensure the data remained nationally representative on key demographics. Comparisons to data from last year are taken from Boxclever research among 4,896 UK adults conducted between 16-23 July 2021.

How to decide when to retire

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A couple sat working through their finances and pension planning

Over a third of over-55s think they will work beyond their state pension age.

We are witnessing a surge in the number of people giving retirement a second thought due to inflation rates and the cost of living crisis. Not only are more individuals looking to work beyond their State Pension age, but some are returning to employment after retiring due to increasing financial pressures.

Over 2.5 million people aged 55 and over will be impacted by the long-term effects of financial insecurity and think they will continue to work past their State Pension age. Additionally, half of those aged 55 and over don’t believe their pension is enough to fund their retirement, a survey has revealed[1].

Increasing cost of living

Nearly four in ten over-55s who are not retired anticipate having to work past their State Pension age due to the increasing cost of living. Financial concerns surrounding retirement funding are the top drivers behind working beyond State Pension age.

A quarter (23%) are uncertain of how long their retirement savings will last, and almost one-fifth (18%) admit to not having made any preparations for when they stop working.

Ability to remain employed

Nearly half (46%) of the millions of older workers expecting to work past their State Pension age are apprehensive that doing so will mean they can’t enjoy their later years.

Health, too, is another major concern, with nearly half (45%) worrying their health will deteriorate as a result of having to continue working and more than a third (35%) concerned it will affect their ability to remain employed.

Heavy financial strain

Worryingly, 16% are concerned about being treated differently or worse at work because of their age and the same number worried about not being able to spend enough time with their family due to work commitments.

Looking ahead, the older workforce is expected to be crucial to the UK’s economic recovery as it will help ease severe labour shortages, yet this warning sign points to heavy financial strain many are facing.

Cash flow forecasting

We all want to be in control of our retirement plans and feel confident we can stop working when we want to so that we can enjoy the retirement we deserve.

We use sophisticated cash flow forecasting software and together we can plan and analyse your financial goals, review how changing circumstances could impact this plan and to see how likely it is these financial goals can be achieved.

If you are worried about how your current situation and the cost of living could impact on your retirement savings, we are here to talk through your options. To find out more, please speak to us.

Important information: A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

Source data: [1] Survey conducted by Opinium among 2,000 UK adults between 21-25 October 2022.

4 reasons it might be time to retire

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4 reasons it might be time to retire

Are you asking yourself ‘Can I retire or do I need to work longer?’

1. Time is the only non-renewable currency

Are you sacrificing time to get more money? At some point, time becomes more valuable than money.

2. You may need to improve your health

Work related stress has a negative impact on your health. A job demands more than just your time Is it time to dedicate time into improving your health?

3. Spend more time with family

What does your job cost in terms of relationships? Your best health years are limited. Capitalise on your active years.

4. When you are financially ready

How do you know this? Cash flow modelling can show exactly how and when.

Start your retirement planning journey

Get in touch to speak to one of our Financial Advisers to find out more about our retirement planning services

Financial advice for retirement

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Regional Manager and Financial Planner, Dax Bayley, outlines how financial advice can benefit you in your retirement planning.

We will work together to create a holistic, comprehensive financial plan to achieve your goals.

Start your retirement planning journey

To find out more about how Ellis Bates Financial Advisers can help you answer questions such as ‘how much do I need to retire?’ or ‘what are my retirement options?’, then please get in touch.

How do you know when you are ready to retire

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6 Questions to ask yourself for a secure financial future

The concept of retiring is an attractive prospect for many people. Having the freedom to enjoy life and pursue hobbies or interests without the pressures of a 9-5 working life can be hugely appealing. However, it’s important to make sure that you have your finances planned out to make this dream of retirement achievable.

While there are variations in what defines true financial security for retirement, planning ahead is a key factor that should not be overlooked when considering when you should retire. This means starting to plan your finances well before you expect to retire so that you can build up enough funds over time.

Figure out when you are truly ready to retire

There are signs and targets that can signal that you are prepared to retire, but it can be difficult to figure out when you are truly ready to retire. We may think of retirement as being centred around a particular age or monetary amount. When we get to ‘X’ years old or have ‘Y’ amount of money, we can move on to our ‘golden years’.

The turbulent times we’re living through have given many people pause for thought to consider their work-life balance and think more seriously about what makes them happy. While happiness for many increases in retirement, others find their finances take the strain when they retire early, and money worries are one of the biggest factors resulting in people returning to work. If you aspire to retire early, it’s vital you plan your finances to be sustainable for the long term.

1. What impact could inflation have on my retirement plans?

Inflation is a major factor when planning for retirement because it can reduce the purchasing power of your money over time. If the amount you receive in retirement is based on a fixed income, it will not be able to keep up with future inflationary rises, meaning that you may likely be unable to afford the same lifestyle that you enjoyed before retirement.

Therefore, it is essential to plan for retirement by ensuring that your savings and investments can grow in real terms, above the rate of inflation. This can be done through a combination of investing in assets that aim to provide returns above the rate of inflation, as well as ensuring that your retirement income is not linked to a fixed amount but instead grows with inflation over time.

2. What is my retirement timeline?

When it comes to planning for your retirement, it’s best to get a plan in place far ahead of your intended retirement date. That way, you can take the time to gain a full understanding of your financial situation and identify any issues or opportunities for improvement. Ideally, you should start saving for retirement in your 20s and 30s, even if you don’t plan to retire for many years. This will help you build your savings over time and ensure that you have enough money to sustain yourself during retirement.

Of course, if you find yourself nearing retirement without a plan already in place, don’t fret, we are here to help. With our expertise and experience, we can work with you to optimise your retirement plans no matter how close you may be to retirement.

When considering your retirement timeline, there are several factors to consider: your age, income level and lifestyle, all of which will influence your retirement plans.

3. Could retirement cash flow modelling help me?

Retirement cash flow modelling is very useful in making assessments about your future retirement requirements. It enables you to consider all of your potential sources of income in retirement and how they can best be used to satisfy your expenditure needs.

This means considering a number of factors such as your underlying investments, tax and, most importantly, how well your different income streams are protected against inflation. Another benefit of using cash flow modelling is that you can easily change those assumptions if your circumstances change, factoring in different investment returns, tax rates and inflation. This allows you to assess how much you need to have accumulated prior to your retirement.

4. Would an annuity be beneficial?

Retirement is an important milestone in life, and it’s essential to make sure you have enough money to ensure a comfortable lifestyle afterwards. One of the options available to those retiring is an annuity. With fewer employers now offering the guarantee of a final salary pension, annuities could be an appropriate option to consider for some retirees. An annuity provides a regular income for the rest of your life and can make sure you have enough money to last you throughout retirement.

But to decide whether an annuity is right for you, it’s important to look at the different types of annuities available, consider the tax implications and other factors such as inflation. An annuity could be beneficial for those who have no capacity for their income to fall in the future, and those with reduced health.

5. Am I sitting on too much cash?

Even during periods of high inflation, investments that are in real assets can provide a hedge against the erosion of wealth. Cash holdings are ill-advised in this situation as the current interest rates barely meet inflation and its real value is guaranteed to decrease. Investing in assets is one of the best ways to safeguard your retirement savings against the effects of inflation.

Inflation can erode the value of your savings over time. By investing in real assets, you can help to ensure that your retirement savings remain secure even in a rising inflation environment. Investing in assets can provide you with the opportunity to create a sustainable and secure retirement plan that is protected from the effects of inflation. Ultimately, investing in real assets is an important part of any comprehensive retirement savings strategy.

6. What is my attitude to investment risk?

When making investment decisions, you need to establish the level of risk that you are comfortable with. This will vary from person to person, so it is important to obtain professional advice to help you assess your risk tolerance. Understanding your attitude to investment risk is an important factor when planning for retirement. Taking the time to learn about how you respond to different kinds of market volatility and levels of risk will help you create a more informative and effective retirement plan.

Knowing what kind of investor you are – conservative, balanced or aggressive – will enable you to make informed decisions about where to invest your money and how much risk you are comfortable taking on. It can also help you avoid some of the common pitfalls associated with retirement planning, such as being too conservative or overly aggressive in your approach. This will help you to save and invest more effectively, allowing you to make the most of your retirement savings.