Retirement

 

 

Retirement Planning

Planning for your retirement needs serious consideration and financial planning, this should not be left until the last minute.

These financial decisions will be in place for the rest of your life which could be up to thirty to forty years, in some cases even longer.

You will need to consider the following factors

  • Level of income required to maintain your lifestyle
  • Amount of guaranteed income
  • Spouses independence income
  • Effect of inflation
  • State of health

Factors such as your investment portfolio need to be reviewed depending upon the retirement income and product you intend to use.

Annuities

Pension annuities provide a guaranteed income for life; however this is not as straightforward as it seems.

You will need to decide if you wish your income to increase each year and be payable to a dependant in the event of your death and if this means a reduction in the level of income. All of these choices will impact the level of income that you will receive.

Annuities can be underwritten based on your health (enhanced annuities) and you should always compare the market to maximise the level of income you may receive.

If an annuity is appropriate for you it is generally advisable that you should reduce the investment risk within your portfolio as you approach retirement. This will negate large investment fluctuations as you draw near to retirement.

 

Drawdown

As annuity rates are near all-time lows, some clients prefer to leave their capital invested and draw a regular income, this is known as drawdown. This enables you to retain flexibility over your pension options and can allow you to delay purchasing an annuity until you feel that an annuity provides value for money.

The drawback to having flexibility is that your Pension fund remains invested. This means that if investment returns are poor or there is a substantial fall in the value of your investments, then there is the chance that your fund could deplete prior to your life expectancy.

At Howard Wright we provide a range of risk focused actively managed investment portfolios designed to assist our clients to achieve their income objectives in retirement. If drawdown is suitable for you, then there is usually no need to reduce the level of investment risk you are taking prior to your retirement. Further considerations may need to be made if you intend to withdraw a tax-free cash lump sum.

Your existing arrangements need to be reviewed to ensure that they offer drawdown, if this is to be an option to be considered.

Retirement options Report

We have developed our own retirement options report, which covers all of the above issues in detail with illustrations bespoke to your personal circumstances. Your adviser can then recommend and implement a suitable product or range of products, which is targeted to meet your objectives.

The value of investments and the income derived from them can fall as well as rise. You may not get back what you invest.

Protection

Some Clients find that their need for protection policies are no longer needed in retirement but for some this is not the case. Clients may find that they have not saved sufficiently for retirement or income is heavily biased in favour of one partner, leaving the surviving partner with insufficient assets to meet their requirements in the event that their partner passes away.

Polices such term assurance or whole of life plans can provide a lump sum in the event of an individual’s death to ease the financial burden on the surviving partner.

As part of your retirement planning your adviser will consider the income that you will receive in the event of either death and provide recommendations for any shortfalls.

Clients may be advised to consider life assurance to provide a payment in the event of their death to either cover a known liability such as funeral costs or inheritance tax.

 

Trust Documentation

Trust documentation is essential as this ensures that the policy benefits are paid to the right individuals in an efficient manner and avoiding the need of probate and potential Inheritance tax.

At Howard Wright we can help you with the implementation of Trusts.

Private Medical Insurance

Private Medical Insurance is designed to fully / partially meet the costs of private medical treatment for you and your partner. This can reduce treatment waiting times and potentially give you access to more specialist treatments.

Mortgages

Developments in the mortgage industry mean that later life mortgages such as equity release are becoming more and more popular.

We provide advice on the most suitable for your requirements, whether this be fixed, variable, capped or discounted. Other features such as offset accounts will also be considered.

Howard Wright will be remunerated from the mortgage provider which is usually 0.3% of the loan amount. For example, a Mortgage of £150,000 would result in a fee of £450 from the lender. The costs will be confirmed to you before any business is transacted.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Equity Release

Equity release is a product which allows individuals to unlock some of the equity within their property, usually to assist with covering expenditure shortfalls in retirement.

Usually no monthly payments are required, though interest will increase the outstanding debt each year. Both retirement interest only and equity release mortgages are usually repaid when you sell your property, move into long term care or pass away.

We have advisers who are fully qualified to help you in deciding whether these mortgages are appropriate for you and if so, we have the sourcing systems in place to recommend the most suitable product.

Howard Wright charge a fixed fee of £3,000 for Equity Release advice.
This is a lifetime mortgage (home reversion scheme). To understand the features and risks, please ask us for a personalised illustration.

 

Retirement Interest Only

Retirement interest only mortgages, allow you to keep your interest only mortgage into retirement as long as you can afford the monthly payments.

Your circumstances may mean that you have not been able to clear debt prior to retiring and as such these can provide valuable breathing space, without having to sell your home.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Estate Planning

In retirement, estate planning is usually concerned with ensuring that your assets on death are paid to the individuals that you wish to inherit your assets or take steps to minimise your inheritance tax liability.

Wills

A Will is the recommended starting point for most of our clients, who incorrectly believe that their spouse or next of kin will automatically inherit the whole of their estate in the event of their death. As part of your plan we review any existing Wills that you have in place or recommend alteration and amendments. If a new Will is required our team of fully qualified Will writers are here to help you.

Inheritance Tax

In the majority of cases inheritance tax can been seen as voluntary tax, our inheritance tax options report provides a review of all the options available to legally minimise your inheritance tax liability.
This includes but is not limited to;

  • Providing an overview of the allowances and exemptions that are available to you.
  • Provide considerations for redistribution of assets between spouses / partners.
  • Assess your ability to gift capital without impacting your ability to fund your retirement.
  • Outline the main features and suitability of various trusts including, bare, discretionary, discounted gift, loan and reversionary trusts.
  • Provide illustrations for life assurance, which allows you to retain your capital, whilst providing a lump sum in the event of death to cover your liability.

 

Powers of Attorney

Howard Wright would recommend that individuals consider undertaking Lasting Powers of Attorney (both Health and Financial). These documents allow your nominated attorney to manage your affairs in the unfortunate event that you lose mental capacity or simply do not wish to manage your affairs anymore.

Howard Wright can assist you in the completion of these forms.

The Financial Conduct Authority does not regulate Tax Advice, Will Writing, Estate Planning and Trusts.

 

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