Retirement savings options page

Navigating the ins and outs of Retirement Planning

 1024 535 Jess Easby
By:
0

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:

"*" indicates required fields

Name*

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 (https://www.ellisbates.com/privacy-policy/) Privacy Policy.

Time to kickstart your retirement plans? 

 1024 683 Jess Easby
By:
0
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.

"*" indicates required fields

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 (www.ellisbates.com/privacy-policy/).

Millions may have to rethink their retirement plans

 1024 683 Jess Easby
By:
0

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.

"*" indicates required fields

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 (www.ellisbates.com/privacy-policy/).

Debt and Retirement Planning

 800 471 Jess Easby
By:
0

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:

"*" indicates required fields

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 (www.ellisbates.com/privacy-policy/).

Watch now: When can I retire?

 1024 502 Jess Easby
By:
0

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?'

"*" indicates required fields

Name*

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 (https://www.ellisbates.com/privacy-policy/) Privacy Policy.

Income in Retirement

 560 315 Jess Easby
By:
0

Put simply, an individual’s life can be split into two phases: the accumulation phase, and the decumulation phase.

Accumulation Phase Decumulation Phase
Most retirement planning advice focuses on the accumulation phase – that is, how large a pension pot will need to be; and, to achieve that size of pot, how much you will need to regularly save and in which assets you must invest those savings. During this phase, you start to rely on their savings to finance all or part of their living costs. Within this, there are two main objectives:

Ensure you enjoy the best quality of life possible.

Ensure you do not outlive your savings!

There are many uncertainties that can complicate your and your Adviser’s decisions when planning a long-term investment strategy.

  • Longevity Risk – you live longer than anticipated, so you could run out of money.
  • Inflation Risk – your money does not stretch as far as it used to.
  • Market Volatility – the value of your investments and the income generated by them can fall as well as rise, meaning you have less in your pension fund when you retire.
  • Withdrawal Strategy / Pound Cost Averaging – if withdrawals are made when markets are falling or low, more of the assets need to be sold to cover the withdrawal. This impacts the ability of the remaining portfolio to generate returns for the future.
  • Healthcare Costs – as people age, they are more likely to need healthcare, which can be costly.
  • Government Policy – changes in government policy can affect the spending power of your savings, the attractiveness of pension products, among other things.
  • Personal Circumstances – risks specific to your individual circumstances.

Many individuals will retire with a number of different assets and savings vehicles such as a pension, ISA, cash accounts and property. Each type is subject to different risk/return profiles, as well as different tax treatments with regard to income, capital gains and inheritance tax.

While some people may find that the income provided by external sources is sufficient to cover their day-to-day expenditure in retirement, others may want or need to draw on their EB portfolio – some may draw down the capital, while others may rely solely upon the income generated by the investments (the ‘natural income’) and seek to leave the capital intact.

Whichever approach is taken, a strategy that is suitable for you today may not be suitable in the years to come, due to factors such as inflation.

This is demonstrated in Figure 4 and Figure 5. These charts assume:

  • an initial portfolio value of £1 million
  • a withdrawal of 5% of the original invested amount (i.e. £50,000) a year
  • the amount withdrawn increases by inflation each year (0% in Figure 4, and 2% in Figure 5), and
  • the balance remaining invested in stock/bond markets to generate capital growth and income (i.e. a total return), growing at a steady rate of 4% a year.

No Inflation: How long will a client’s portfolio last?

Withdrawing 5%, inflation 0%, investment growth 4%

2% Inflation: How long will a client’s portfolio last?

Withdrawing 5%, inflation 2%, investment growth 4%

Sustainable Withdrawal Rates

A general rule of thumb is you can withdraw up to 4% a year if you do not wish to run out of money during your lifetime. This is based on average life expectancy, and accounts for 25 years of returns even without any growth in markets – in reality, the long-term average for portfolios is greater than this, and we would expect above-zero returns in most years over the long term.

That said, there may be circumstances when someone can withdraw more each year (say, 8% – for example, they have a short life expectancy, as shown in Figure 6) or less (say, 2% – for example, they wish to keep the capital value of their remaining portfolio intact).

Increased Withdrawal Rate: How long will a client’s portfolio last?

Withdrawing 8%, inflation 2%, investment growth 4%

Find out more

Whatever your investment experience, our teams are here to help and support you on your investment and retirement journey. Find out more about investing with Ellis Bates Financial Advisers, or alternatively please get in touch by filling out the form below.

How can we help you?

"*" indicates required fields

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 to decide when to retire

 560 315 Jess Easby
By:
0

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.

Financial advice for retirement

 150 150 Jess Easby
By:
0

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.

Long Term Retirement Plans

 560 315 Jess Easby
By:
0

Planning your finances to be sustainable for the long term is key.

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.

6 questions to ask yourself for a secure financial future

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 are able to 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 have an effect on your retirement plans.

3. Could retirement cash flow forecasting help me?

Retirement cash flow forecasting 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 in order 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.

Our retirement planning services

We understand that everyone’s retirement plans are different. That’s why we’re here to help you make sense of your future, whatever that looks like. To get your retirement plans in motion, talk to us about your finances. We look forward to hearing from you.

Important information: This article 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 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.

Prepare for your retirement

 150 150 Jess Easby
By:
0

Independent Financial Adviser, Carl Hasty, outlines how you can prepare for your retirement including locating lost pensions, considering other income sources and calculating how much you anticipate spending in retirement by using our handy retirement calculator.

To discuss more about your retirement options or to find out more about our retirement planning services, please get in touch.

  • 1
  • 2