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How to plan your dream retirement - a financial adviser's approach

Telephone adviser Clive Thomas describes his approach in helping clients with their retirement planning.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

One of the most common reasons for seeking financial advice is to plan your retirement.

This is understandable - it’s arguably the most important financial decision you’ll ever make, and the earlier you start planning the greater chance of achieving your goals.

Below I describe how I approach advising my clients on their retirement strategy, from building a sufficient pot, to the decisions taken as retirement draws closer.

When do you want to retire and what will retirement look like?

We always tend to start with the end in mind. It’s important for us to establish a clear understanding of goals and aspirations.

During their working lives, many clients simply focus on accumulating assets. But they often haven’t given enough thought as to when they might retire and how these assets will be best used to support them once they’ve stopped working.

With this in mind, the first step is sketching out what your ‘dream’ retirement looks like. When do you want to retire, and how much income will you need to fund the lifestyle you want?

Are you saving enough to meet your goals?

Once we have a date and a figure in mind we can work backwards to assess whether you’re on track.

We’ll look at your existing pensions and other investments, and then make realistic assumptions about growth rates to make some projections and identify any shortfalls.

If there’s a shortfall, we work out what additional contributions are needed to help plug the gap. For many this will involve putting more into pensions and ISAs while they’re still working. Of course, you can make these projections yourself, and we have numerous tools which can help - including our pension calculator. Our tools and calculators can provide you with useful information but they are not personal advice. If you are at all unsure please contact us for advice.

If you’d like a little more help, financial advice might be right for you. I work with clients like this every day and help them budget and prioritise to move them closer to their dream retirement.

Are you on track? Book a call back today

Are your investments working hard enough?

Another important factor is investment performance. As such, part of our process is constructing a portfolio of investments which is right for you.

This involves striking the right balance between taking a level of risk you feel comfortable with, while investing in areas with sufficient growth potential to achieve your goals. Costs can have a significant impact on investment performance, an adviser can ensure that you are not paying too much for policies or services that you neither need, want nor value.

The importance of regular reviews

This type of planning and the illustrations used with it are estimates. Naturally there are no guarantees - markets don’t always perform as we expect. And tax rules are constantly changing, especially when it comes to pensions.

For this reason reviewing your plans regularly is crucial, and should be conducted at key staging posts relative to your chosen retirement date. For example I would usually suggest a review five years from retirement.

We marry our services and approaches with those our client’s value – some want to pay for ongoing advice and the Hargreaves Lansdown Review Service is tailor-made for such clients. Others want one off advice and want to avoid paying for advice year on year – safe in the knowledge that they can take ad-hoc reviews efficiently at a time of their choosing.

Would you like an expert to review your plans? Book a call back today

Pensions are the cornerstone, but look elsewhere too

Pensions offer fantastic tax advantages, particularly for higher rate taxpayers or those within employer schemes. Pensions are a cornerstone of retirement planning and are likely to remain so. Though do remember benefits do change and are dependent on personal circumstances.

However, pensions alone may not be the answer.

Investors with significant pension pots may find themselves restricted by the lifetime allowance – a cap on the overall amount you can hold in a pension while retaining their tax-efficiency. There may also be a desire to retain some flexibility to draw on your assets before you retire if necessary.

For these reasons a mixture of pensions and other investments, such as ISAs, could be considered.

ISAs and retirement: the perfect complement to a pension?

How will you use your pension at retirement?

Towards the later years of working life, your options at retirement could impact on your investment strategy.

If you’re looking for a secure income for life, you may like to consider an annuity, you may also wish to choose less volatile investments in the run up to retirement. This can help reduce the risk of a sharp market fall reducing the income you’re able to achieve.

But if you’re planning to use drawdown, where your pension pot remains invested, your timeframe is extended, and reducing risk can be less of an issue.

Your options at retirement explained

Could you use some help?

Almost 50% of those who seek advice from us do so because they’re approaching a life-changing event, such as retirement.

If you would like a Financial Adviser to assess how close you are to achieving your dream retirement, and help you put a plan in place, please contact us today.

We’ll only suggest advice if we think you will benefit financially. For many clients we provide information to manage their own financial plans without paying for advice.

Initially, our Advisory Helpdesk will help you determine whether you actually need advice. If advice sounds right for you, we'll set up a free initial meeting with a Financial Adviser.

Our charges are competitive and it typically costs 1% of the value under consideration for personal advice.

Book your call back today

All under one roof

A final point. Before making a plan, you need to understand your current position. Many investors have numerous pensions and other investments spread across different providers. Bringing all your pensions and investments into one place can help give you more visibility. And with visibility comes control.

Transferring existing pensions and investments to Hargreaves Lansdown is easy, and could make planning your retirement that much easier. Before transferring a pension please ensure you won’t lose any valuable guarantees or incur excessive exit fees.

See our current transfer cashback offer including terms

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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