Pension and Retirement Income Planning


At some point in the future, most of us want to slow down and stop working but still afford a relatively good standard of living without having to cut spending too drastically.

During our working lives, we earn income from employment or self employment to save and pay for living costs, holidays, etc. but when our earned income stops, there is a clear need for an income to come from somewhere.

This normally means using income and capital sums earned during our working lives to save enough capital to draw upon to fund what will hopefully be the longest holiday of our lives!

All going well, we should all be paid a flat rate basic state pension, but this will amount to far less than most people actually want or even need to survive, let alone provide for a comfortable retirement.

For those people lucky enough to have a generous company pension scheme, a large part of their retirement income could be generated that way.

For many people however, the bulk of their income when they stop working will come from their private savings.

Whether using ISAs, a buy to let property portfolio, Unit Trusts, OEICS, cash accounts or pension plans, the onus is on the individual to accumulate a large savings pot with which to generate or convert to income.

Modern personal pension plans offer numerous investment options and are extremely tax-efficient investment vehicles that can be used to save up money far more quickly than alternative methods of savings that don't have the generous tax-relief that pension plans benefit from.

Regardless of the medium you use to accumulate the savings, careful planning to ensure that you are saving enough on a monthly or annual basis is critical.  Regular reviews to assess investment returns, inflation, charges, annuity rates and volatility are paramount to keep the target retirement income on track.