Planning for Rainy Days… and Sunny Ones

25th March 2016

A recent survey from Aegon found that while most people were looking forward to their retirement, there continues to be widespread concern about what the reality may bring.
Colin Chamberlain, from Chamberlain Stean and West, looks at the most common retirement worries, and suggests ways in which they can be addressed

i. Will I have enough money?
New retirees are faced with a complex range of choices, often having several pension pots to juggle and different scenarios to plan for. Having greater control over your pension means yet more decisions to make. Not all pension providers intend to adopt the new flexibilities and transferring to new plans can take weeks.
Think ahead about how you might want to access your savings in retirement. You’ll have a choice of accessing cash, keeping your savings invested, drawing a flexible income, buying a fixed income or some combination of these. It’s important to review your pension savings and estimate the income they’re likely to generate in retirement. If there’s a shortfall in your savings, the earlier you spot it, the easier it will be to fix.

ii. What if my health fails?
Your health is paramount to enjoying a good quality of life, and for retirees, the concern is whether they will be able to pay for good quality healthcare or long term care when they need it. A recent study found that one in four of us will require care in later years and the cost can be astronomical (one in ten will incur costs over £100k). The Government’s new care capping rules for 2016 will also have an impact. Preparing – and thoroughly planning for – the worst, while enjoying the best of your retirement is both prudent and possible.

iii. Will I get bored and lonely?
Retirement should be the time when we get to do the things we’ve always dreamed about, but if you are worried at the idea of stagnating in your leisure days, you could always approach retirement in phases. Cutting down hours to part-time can help accustom yourself to the change. Many would-be retirees favour this approach as it keeps them mentally and physically active, socially engaged and they enjoy the sense of purpose that work gives them. Think about it as a way to achieve a more rewarding work life balance with the opportunity to earn and to feel valued. The income will be handy for those future plans, too.

iv. How do I avoid being scammed?
The most radical change to the pensions industry in a generation has unfortunately spawned a growing number of scam-artists who target retirees. An increased number of unregulated investment firms are actively pursuing over 55s and their newly free pension savings. While everyone is at risk for fraud, retirees often face greater risks. High-earning professionals, you may be surprised to learn, are the most likely to fall victim. Always make certain that the firm you are dealing with is regulated by the FCA and get in touch with the regulator directly if you are uncertain. Remember, if it sounds too good to be true, it probably is.

v. The Unexpected
Everyone fears the unknown. If you are unsure whether your pension plans are performing in line with your expectations, and if you’ve made the right pension choices – don’t leave it to chance. The best approach is to take independent financial advice from a professional financial adviser to help you plan for a comfortable retirement with a plan that can adapt to changing circumstances. With your financial arrangements in place, you’ll be rewarded with peace of mind and the freedom to enjoy a fulfilling retirement.
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