How much to retire page

Financial advice when planning retirement

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People who are confident about their retirement are most likely to have specific retirement goals and know what steps they need to take to reach them. But sadly, we see many people do not feel confident that they will have enough savings to live comfortably after they retire.

Many people have a fear of outliving their money, but most don’t have a clear idea of how much money they need during retirement. It’s important to remember that retirement doesn’t happen at a certain age, it happens when you have enough money to live on.

Seeking professional financial advice can help create a clear direction and understanding which will give you peace of mind that you are on the right track.

If you’d like to discuss your retirement, and would like to speak to an expert Financial Adviser, please get in touch:

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When am I financially ready to retire?

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The earlier you start retirement planning, the better. However, with the demands of managing a busy working and personal life, this is something that can understandably be neglected. But 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.

In our latest video, Financial Adviser Gary Davies discusses how to know if you are financially ready to retire.

If you are considering early retirement and would like to speak to a Financial Adviser, please get in touch:

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What do you need to consider when planning an early retirement?

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There’s a lot to consider if you are planning an early retirement. But as you work through it, you might realise that you’re more prepared to retire early than you initially thought. 

If you aspire to retire early, it’s vital you plan your finances to be sustainable for the long term and our expert team of Financial Advisors are here to help you every step of the way.

If you’d like to speak to us about early retirement, please get in touch:

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Navigating the ins and outs of Retirement Planning

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The past few decades have witnessed significant transformations in retirement planning. The security of a fixed income from a final salary pension is now a rarity, and eligibility for the State Pension now comes at a later age.

The sooner you initiate your retirement planning, the higher your chances are of amassing sufficient savings to maintain your desired lifestyle post-retirement.

We have produced a guide to Navigating the ins and outs of Retirement Planning to help you begin your financial journey:

To download the guide, fill out your details:

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Time to kickstart your retirement plans? 

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Time to kickstart your retirement plans? 

Retirement signifies a well-deserved achievement, a significant turning point in life. It should be a period of anticipation and joy, an opportunity to indulge in activities that bring happiness and contentment. Currently, retirement is marked by increased flexibility in accessing your pension savings. While this offers many choices, it also gives rise to numerous queries. 

Retirement planning, accompanied by crucial decision-making and understanding various options, might seem daunting, especially with the escalating cost of living affecting several financial plans. This is where the value of professional retirement advice comes into play. We can help you simplify major decisions by clarifying your options, instilling confidence in your choices and ensuring they are beneficial and tax-efficient. 

Retirement Lifestyle 

With the UK witnessing record-breaking inflation in food and fuel prices, the rising cost of living undoubtedly influences our financial plans. If retirement is on the horizon, apprehension about increasing inflation, interest rates and the potential impact of the cost of living crisis on your retirement lifestyle is quite natural. 

We can guide you in such circumstances and assist in determining an achievable retirement date based on your total income and expenses. When you include all your potential income sources, not merely your pension savings, you might discover the possibility of retiring earlier than anticipated or gradually reducing work hours before fully retiring. Even if immediate retirement is outside your agenda, we can help you understand when you can afford to retire. 

Income Sources 

We’ll work with you to analyse all your income sources to estimate your possible annual income post-retirement while ensuring you have sufficient funds for as long as you need. Income sources will likely include pensions, your entitlement to a State Pension, and any savings or investments like Individual Savings Accounts (ISAs). Rental income from a buy-to-let property may also be an option, in addition to any equity in your home that you’re willing to release, either through downsizing or equity release. 

As your retirement may last 30 to 40 years, ensuring your income lasts throughout this period is crucial. As we’ve witnessed over the previous few years, inflation rates have reached double-digit figures, so ensuring your money is working hard for you is more important than ever. 

Beat Inflation 

Investing a portion of your money during retirement also offers growth and an opportunity to beat inflation. This is where our professional advice is essential, helping to ensure your money is invested wisely and that your investments align with your retirement plans. However, remember that investments can fluctuate in value, and you may get back less than you initially invested. 

Overpaying taxes in retirement is another common pitfall. For instance, if you withdraw more from your pension savings than necessary, you could pay more tax than required. 

We can guide you through this, ensuring you draw your retirement income in the most tax-efficient way. However, bear in mind that tax laws and legislation can change. Your circumstances, including your location within the UK, will significantly impact your tax treatment.

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Millions may have to rethink their retirement plans

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More than one in ten have mortgage debt in the final decade before they retire

Two-thirds (67%) of Britons admit to having debt that is weighing them down, according to a recent study*. Additionally, nearly one in ten (9%) adults in the UK are unsure about the amount they owe in outstanding debts, rising to more than one in six (16%) among those aged 45 and over.

Credit or store card debt is the most common form of debt, accounting for 32% of respondents, followed by personal loans (16%), overdrafts (15%) and unpaid household or utility bills (10%). Surprisingly, more than one in ten (11%) individuals aged 55 and above have mortgage debt in the final decade before retirement.

Impacting retirement plans and financial security

Having debt can significantly impact retirement plans and financial security, leading to increased stress and reduced income in retirement. Taking proactive measures to reduce debt before entering retirement is essential. These actions include consolidating debt, paying off high-interest loans, reducing unnecessary expenses and working with financial advisers to create a comprehensive retirement plan.

Funds to cover unforeseen expenses

Comparing results from 2021 to 2023, the survey found that debt has increased among 52% of 45-54-year-olds. However, respondents have also tried to address their debt situation, with 38% cutting back on non- essential spending, 21% working overtime or getting a second job, and 13% seeking advice from debt services or helplines.

Furthermore, unexpected bills have posed challenges for many individuals, with 31% of Britons paying an unexpected necessary bill of £850 or more in the past 12 months. While 57% of UK adults claim to have emergency savings, only 24% used these funds to cover unforeseen expenses.

Importance of managing debt effectively

Instead, 19% relied on credit cards, 11% sought help from family or friends, and 8% took out loans or used their overdraft. Additionally, 5% resorted to payday loans, and another 5% cashed in their pensions to manage unexpected costs. These findings highlight the importance of managing debt effectively and planning ahead to ensure a secure financial future.

Looking for a financial advice tailored to your needs and goals?

Navigating the world of finance can be daunting, with numerous options and decisions to make. That’s where we come in. We offer personalised financial planning and advice tailored to your needs and goals. To learn more about how we can help you, please don t hesitate to contact us.

*Source data: The research was conducted by Censuswide between 20–24 April 2023 of 2,009 general consumers, aged 18+, national representative sample. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles.

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Debt and Retirement Planning

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Navigating the world of finance can be daunting, with numerous options and decisions to make. That’s where we come in.

Get in contact to discuss your retirement planning needs:

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Watch now: When can I retire?

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On 7th December we held our ‘Ask the Financial Adviser: When can I retire?’ webinar.

If you missed the webinar and would like to watch the recording, please fill out the form below to receive your link.

Watch our webinar 'When can I retire?'

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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.

Example:
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.

How can we 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 – https://www.gov.uk/check-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.