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Frequently asked questions

Start by trying to answer three key questions:

  1. How do you want to live your life when you retire?
  2. How much money might you need to do that?
  3. And how much money might you get in retirement from private and workplace pensions, the State Pension and any other investments?

 

A key part of retirement planning is comparing the answers to questions 2 and 3. If there’s a gap, the next step is working out how to close it – by improving and adding to your investments and considering lifestyle choices along the way.

You can usually access your pensions from age 55 (rising to 57 from April 2028), but this does not mean you can afford to retire. When you can afford to retire depends on how much you’ve saved and the lifestyle you want to live. The earlier you retire, the more money you’ll need because that money has to last longer, without income from work.

At Pension Sense, we help you work this out properly. We’ll help you feel proud of what you’ve already saved (we know it’s not easy) and explore ways to improve and grow your pension so you can aim for a realistic retirement age. It’s never too late to start. Taking control now can give you more flexibility around when and how you retire.

If you are already saving for retirement, good on you.

Of course, the more you can put away now the better, but not many of us have lots of spare cash at the end of each month. That’s why, having a tailored plan that feels achievable can make all the difference in helping you feel more in control of your future.

We approach retirement planning by helping you set realistic monthly saving goals based on your income, existing savings, future goals and other commitments, while making sure your pension works as hard as you do.

Not all pensions are the same. Some are great, some are really poor, and there are lots in-between. So, there is a chance you could improve yours, and the first things we check are cost and performance. Could you pay less in fees, and could your investments perform better?

For example, if you have a workplace pension and your money is invested in default funds, it’s worth checking to see if there is a better option for you. Making your pension work harder for you is one of the first things we look at when providing pension advice.

If you are unsure where to start, why not have a no-obligation chat with one of our regulated financial advisers?

The big things are 1. The reassurance of a realistic plan that makes you feel in control of your future and 2. The peace of mind that your pensions are working hard for you.

Our friendly highly-trained specialists will work with you to create a retirement plan that is tailored to your unique circumstances. They’ll review your current pensions, identify potential improvements, and aim to increase the value of your retirement savings without taking unnecessary risks. They can also help you adapt your plan over time and keep you on track as your focus, priorities and circumstances change.

While there are potential benefits to consolidating your pensions, it is not always the right thing to do. Some pensions come with valuable benefits such as a guaranteed income for life, which you will lose if you transfer out. Others include exit penalties or transfer fees.

‘Easier to manage’ is often presented as a benefit, but that doesn’t make sense if consolidating your pensions leaves you worse off in the long run. Practical benefits should be top of the checklist including paying less in fees and improving potential investment performance.

While pensions can be complicated, the advice you receive should be clear and simple to understand. It should include:

  • an assessment of what you have got
  • a review of your personal circumstances and goals
  • a recommendation for what could be improved and the impact that could have.

You should also be made aware of potential risks. While a good adviser will aim to minimise any risks, they cannot eradicate them. So, pension advice should be an open and honest conversation focussed on your best interests.

Pension advice should be an option for everyone who could benefit from it, not just a privileged few. And if your current adviser says your pension isn’t large enough for them to manage, it may be worth looking for one whose business model better fits your circumstances.

That said, not everyone needs advice. For some people, the fees would outweigh any benefits. Yet, if you have been able to save £30,000 or more into a pension pot, you deserve accessible, professional help to make sure that money works as hard as it can for you.

Currently, you can usually start taking money from your pension from age 55 (rising to 57 from 6 April, 2028), depending on your scheme. However, the aim of a pension is to provide an income throughout retirement. So, taking money early can have a big impact and may result in a lower income in later life.

The first thing a regulated adviser should do is listen and understand what you are trying to achieve. They will then put a plan in place to help you achieve your goals while minimising the risk of running out of money too early.

In theory, planning for retirement begins as soon as you start saving into a pension, and it’s never too early to do that. For most people, though, late 40s / early 50s is a good time to start planning in a bit more detail.

You don’t need to have everything nailed down from the start. And your plan will always need an element of flexibility because life can change quickly. The foundation of your plan starts with a big question: how do you want to live your life in retirement?

When you buy a lifetime annuity, you are selling part or all your pension pot to an insurance company in exchange for a guaranteed income for life.

This means greater certainty and can make planning easier because you know exactly what you are getting and when. On the flip side, a lifetime annuity is not flexible. You cannot sell it or change the terms.

A fixed-term annuity converts some or all of your pension savings into a guaranteed income for a set period, rather than for the rest of your life. At the end of the agreed term, you may receive a maturity value, which you can use to buy another retirement product or provide further income.

This can offer more flexibility than a lifetime annuity because you can review your options when the term ends. However, the terms are usually fixed once set up, and guarantees apply only for the agreed period.

Pension drawdown allows you to keep your pension invested while taking money from it as income.

Compared with an annuity, you have much more flexibility. However, your income is not guaranteed and your money remains invested, which means your savings could take a hit if markets go down. Some people combine drawdown with an annuity to balance flexibility and security.