What is retirement?

Historically retirement meant working all your life to build up a pension pot of money and on the day you retire you pass that pot onto a life company in exchange for something called an anniuty (a guaranteed income for life).

With the introduction of pension freedoms in 2015 meant pension savers could access their pension pots from age 55, you may even remember the newspapers suggesting everyone could go and buy expensive sports cars (please speak to an financial adviser before making this choice as there are some very steep tax implications for doing so).  The age of 55 is due to rise to 57 from April 2028.

This introduction meant pension savers have far more choice than ever before, as this meant accessing your pension benefits flexibly is no longer for just the super wealthy.

A recent report suggest that the average UK household expenditure for utilities, food, council tax etc (not including mortgages) is broadly £842 pm, over a year this is £10,104.  The state pension has only just increased to £10,600 therefore leaving very little for petrol, car payments, holidays, meals out, birthday presents etc etc.  In short the state pension looks to just cover the main bills that is assume you also receive a full state pension, make sure you check out the level of national insurance contributions you are making.

Now this is where pension freedoms come in, who wants to work until their state retirement age?

Have a look at the office of national statistics life expectancy calculator for a 40 year old, this expects the average life expectancy of a male is aged 84, slightly longer for women at age 87.

But what about having some fun, if you retired at state pension age of 68, how many active years do you have left, maybe 12, taking you to 80.  So, you’ve worked 40+ years to enjoy a possible 12.

Would you like to increase those active retirement years of 12 to 15 or even 20 years.

You no longer need to accept the possibility of  just accepting an annuity, what if you only wanted to access a lump sum to cover a number of years worth of income before the state pension kicks in and leave the remaining money invested for your future or possibly leave the money untouched as a legacy to the next generation.

Now if you feel you want more choices to enjoy more years in later life it starts with a call to an independent financial adviser on 01483 654135 or email direct to leon.alden@2plan.com