During our working lives, we have regular income to meet daily expenses and will save towards retirement. When we retire, though, a number of things can and will change.
Whilst the general expectation of retirement is that expenses will decrease, for some, initially they can go up and may increase dramatically, particularly if the plan is to travel extensively or to move house.
Whether your retirement fund is as a result of savings, selling a business, trading down with property, within a pension or a combination of these, the main need in retirement is to preserve capital and to generate income. With this change of emphasis there may be a need for a different investment approach.
Retirement may also bring a lower rate of income tax and with appropriate financial planning or a thorough review at retirement, it is possible to take maximum advantage of this.
Our retirement planning services involve understanding our client’s plans and to structure their investments in the best way possible to optimise tax saving and deferral, with an appropriate risk profile to enable plans to be fulfilled immediately and throughout life. Furthermore, they should be flexible to adapt to whatever twists and turns may lay ahead.
This is supported by our in-house presentation and analysis style which clearly and simply demonstrates how a long-term income requirement can be met and what the impact will be on capital values over the longer term. This in turn enables clients to consider the impact of increasing or decreasing income and utilising capital, either for themselves or with bequests as part of succession planning.
With recent UK legislation changes, pension contracts have become a far more integrated part of retirement income and succession planning than ever before. With almost total flexibility with some types of pension and with an exemption from Inheritance Tax, better overall results can be achieved by prioritising income from other sources and leaving pension funds intact. This can have the dual benefit of lowering taxation on the income and reducing the eventual inheritance tax liability.
This process needs careful management and is an area with which RAFP are fully conversant and able to assist.