5 staycation destinations perfect for autumn

5 staycation destinations perfect for autumn

With summer over, the nights are already starting to draw in and the colder weather is arriving after months of record-breaking temperatures. That doesn’t mean you have to shelve your UK holiday plans until the spring though. Throughout autumn, there is still plenty of places to head without having to step on a plane when you want to enjoy a break.

Whether getting outdoors to take in the stunning autumn views or being cosy inside with a cup of tea is your idea of an excellent autumn break, these five staycation destinations may be just what you’re looking for.

1. Aviemore, Scotland

Scotland is known for its breathtaking scenery and Aviemore is beautiful. Surrounded by mountains and the Cairngorms National Park. If you love to be outdoors, it’s the perfect place to consider for your staycation. You can try your hand at skiing, canoeing and even dog sledding. There are gentler outdoor pursuits to take in, from trails around its stunning national park to wildlife watching.

When the weather turns or you want to head indoors, there are more than enough options for dining, shopping or stopping to have a drink. You can watch, or even take part in, traditional ceilidh dancing too. There’s a chance to step back to the 1700s at the Highland Folk Museum or enjoy a trip on a steam train by taking the Strathspey Railway.

2. Dartmouth, Devon

Dartmouth is situated on the mouth of the River Dart and is one of Devon’s most popular towns thanks to its historic streets and scenic location. As it’s surrounded by countryside, it’s in an excellent location for taking a brisk autumn walk and there are many traditional English pubs to stop at for lunch or dinner to get your energy back too.

Other landmarks to keep an eye out for when you’re exploring Dartmouth include the 14th-century castle, which offers views of the estuary and Baynard’s Cover Fort, which dates back to the 16th century. If you love the picturesque views of the water, why not head out onto the river? The Dartmouth Paddle Steamer is one of the last coal-fired steamers in the UK. Along the way, you’ll be able to take in many iconic Dartmouth landmarks at a leisurely pace too.

3. Whitby, Yorkshire

Why not head to the seaside on your next staycation? Whitby might not offer warm Mediterranean waters this autumn, but it’s got plenty more going for it. Strolls along the coast are guaranteed to offer great views and are even better when you have traditional fish and chips at the end too. The harbour is a great place to end up, the atmospheric Abbey towers, which is said to have inspired Dracula author, Bram Stoker, over the cobbled streets as you walk along the beach.

Not too far from the harbour is a whale bond arch that was erected sometime after 1853, paying homage to the history of Whitby. If you’re lucky, you may even get a chance to see whales in the wild too. In autumn, vast shoals of herring migrate to the Yorkshire coast, attracting a plethora of other animals. Head out on a boat and you could spot seals, whales, dolphins and much more.

4. Stratford-upon-Avon, Warwickshire

Celebrated for being the birthplace of playwright William Shakespeare, you’ll find plenty of history and attractions at Stratford-upon-Avon. The market town is easy to navigate if you want to walk the Shakespeare trail, taking in plenty of sights, including his wife’s Anne Hathaway’s cottage, the family home, which is now a working museum, and his final resting place in the Holy Trinity Church.

Don’t worry though, it’s not all about the famous playwright. Amongst the other things to do at Stratford-upon-Avon include the MAD museum, a butterfly farm and the 18th-century mansion of Compton Verney, which is home to an award-winning gallery and museum, is just a 20-minute car journey away and set in 120 acres of parkland.

5. Cambridge, Cambridgeshire

Cambridge is synonymous with the university in the city, but it isn’t just students that will love visiting here. The stunning building that seems unchanged for centuries makes it the ideal place for an autumn walk as you take in the view. Walking alongside the River Cam, where you can find many college gardens, are Backs as they’re known, is a must. Of course, if you’re visiting Cambridge for the first time, you should go punting on the river too; wrap up warm and relax as a guide navigates.

If you’re a fan of delving into history, a university tour is a great way to explore the nooks and crannies of the world-famous institution. There are several arts venues to take in too, including the Fitzwilliam Museum, as well as plenty of traditional pubs and shops to browse.

The cost of being a landlord in the UK

The cost of being a landlord in the UK

House prices and rental yield have risen significantly over the last few decades. So, it’s no surprise that becoming a landlord is often seen as an attractive way to supplement income or create a nest egg for retirement. However, research shows that landlords have to contend with significant costs too.

If you’re thinking of using property to build up your wealth, it’s important that you go ahead with a clear understanding of how much a landlord can expect to pay out as well as the income earned.

According to research from LV= landlords in the UK are spending nearly £4.7 billion a year on their rental properties. On average, each landlord is paying around £3,134, eating significantly into the profits a property is likely to deliver. For many, the cost and time involved in managing their properties has become so great 600,000 (41%) are actively considering selling up.

Changing legislation for landlords

For many landlords, it’s likely legislative changes are having an impact on the decision to consider selling.

Regulatory changes mean that landlords now have far more responsibilities to ensure their properties are well maintained. This includes making sure all gas and electrical equipment are safely installed and maintained, providing an Energy Performance Certificate and testing smoke and carbon monoxide alarms, adding to the cost of letting a house.

What’s more, tax perks have been reduced. Since 2017/18 a new Buy to Let tax system has been phased in. Prior to this, you could deduct your mortgage interest payments from the rental income, meaning you paid less tax. However, the payments qualifying for this deduction have decreased by 25% a year. From April 2020, you won’t be able to deduct any mortgage interest payments from rental income. This may mean landlords have moved into a higher tax bracket and some could even be left with negative earnings.

On top of this, political and economic uncertainty may play a role in some landlords deciding to exit the market.

Meera Chindooroy, Policy and Public Affairs Manager at the National Landlords Association, says: “Over recent years, landlords have faced a raft of haphazardly introduced new regulations which, compounded by tax changes, have increased the cost of letting. We have not seen any signs yet that the government intends to pursue a more strategic approach to help landlord’s future-proof themselves.”

7 landlord costs to keep in mind

If you’re thinking about investing in rental properties, getting an idea of how much it’ll cost you is essential for seeing if it’s a realistic option for you.

1. General maintenance

The research identified the cost of general maintenance as one of the largest outgoings. Average annual costs were:

  • £370 for renovations and refurbishments
  • £370 to repair or replace boilers
  • £313 fixing structural damage
  • £265 on decorating
  • £203 for garden maintenance

Whilst some of these costs will be from general wear and tear, others will be the result of damage caused by tenants. Due to the actions of their tenants, landlords indicated that walls, white goods and doors were most likely to be damaged.

2. Complying with regulations

In addition to general maintenance, there are regulatory costs to consider. Whilst these are often small, they are worth keeping in mind. An Energy Performance Certificate is a legal requirement that will set you back £65 every ten years. A Gas Safety Certificate must be done every year, which will cost around £80 annually assuming everything is in working order.

3. Tax

As mentioned above, from April 2020 you won’t be able to offset interest in mortgage repayments against tax to be paid. If your income from property rental exceeds £1,000 annually, you must inform HM Revenue and Customs (HMRC) and you may need to pay Income Tax on the earnings. Whilst you won’t be able to offset mortgage repayments against tax soon, you may be able to deduct other allowable expenses, including letting agent’s fees, maintenance and repairs to the property, and ground rent.

4. Agent fees

Whether you use an agent to let your property or not is a personal choice. It does come with some benefits, such as the agency finding you a tenant and dealing with complaints, if you want a hands-off approach. However, this does come with a cost. You may have to pay an additional setup and administration fee when using an agency, as well as a percentage of the monthly rent, often around 10-15%. Be sure to read any terms and conditions carefully before selecting an agency to work with if you decide to go down this route.

5. Void periods

You should account for the period when no one is living in your property, known as void periods. You will still have to meet your mortgage repayments and may face other costs even though it’s not generating an income. Some void periods are unavoidable, but there are things you can do to minimise them such as ensuring you’ve researched the types of properties that are popular in the area and establishing good relationships with tenants.

6. Landlord insurance

Whilst most landlords have a good relationship with tenants, this, unfortunately, isn’t always the case. According to the research, a third of landlords admit that bad tenants are the most challenging part of letting a property. Almost half (46%) have experienced a tenant dispute, whilst 23% say it’s something they have to deal with at least once a year. The reason for disputes varies and include delayed rent and damage to the property. Landlord insurance can offer you some protection and peace of mind.

7. Mortgage repayments

Finally, you will, of course, need to make mortgage repayments. Most Buy to Let mortgages are interest only and, as a result of low-interest rates, will be relatively low. However, it’s important to consider how affordable these are. As you’ll likely only be paying the interest on a mortgage, you won’t own the property at the end of the term. You’ll either need to remortgage, sell the property or make provision to repay the loan.

Can you afford to retire before State Pension age?

Can you afford to retire before State Pension age?

When do you want to retire? Are you dreaming of giving up work before you start collecting your State Pension? With news that the State Pension age is rising and suggestions the government needs to raise it quicker, it’s a question more workers may be thinking about.

With 15th September marking Pension Awareness Day, now is the perfect time to consider whether your pension contributions are aligned with your plans. The sooner you start planning retirement, the more likely you’ll be able to make dreams a reality.

Changes to the State Pension age

Recently, the State Pension age for men and women equalised at the age of 65. However, further rises are planned and the State Pension age remains under review. By 2028, the State Pension age will be 67 and it’s likely to rise beyond this. It’s important to understand when you’ll receive the State Pension and to keep track of how legislative change will have an impact. You can check your State Pension here.

Whilst there are already steps in place to increase the State Pension, you may have seen recent news suggesting that it needs to increase at a much faster pace.

According to think tank the Centre for Social Justice the State Pension age should reach 70 by 2028 and 75 by 2035. The organisation argues getting more people in their 50s and 60s to continue working could boost the economy by £182 billion. It also notes the cost of providing the State Pension, which accounted for 42% of all welfare spending last year, a bill that is rising. Over the last 30 years, the cost of the State Pension has increased by over £75 billion, reaching £92 billion.

If you’d hoped to retire sooner, the State Pension age increasing could derail plans. The Centre for Social Justice paper is simply a suggestion, but you may not want to work up to the point the State Pension age is currently set.

3 steps to calculating if you can retire before receiving the State Pension

So, how can you retire before State Pension age? It’s a goal that requires careful financial planning. Fortunately, if this is your target, Pension Freedoms mean than you’re likely to have more options that you would in the past. Most people are now able to access their pensions from the age of 55, well before they can expect to start receiving an income from the State Pension.

However, simply being able to access pensions earlier in life doesn’t mean you can afford to retire sooner. Your pension provisions are likely to need to provide an income for the rest of your life. Making withdrawals sooner could leave you in a financially vulnerable position in your latter years.

You’ll need to take three essential steps to begin understanding if it’s possible to retire on your current provisions before you’ll receive the State Pension and how to make up a potential shortfall.

1. Set out your goals

Calculating if you can afford to retire before the State Pension age means you first need to set out what you hope to achieve. There are two key questions here; when do you want to retire? What will your lifestyle and spending look like in retirement? Understanding how much income you’ll need annually and your life expectancy are crucial to assessing how your savings stack up.

2. Understand your current pension savings

With an idea of how much you’ll need to retire sooner, you’ll need to look at how much you already have in your pensions. Remember to assess all the pensions you hold and factor in likely investment returns between now and your intended retirement date. With these figures, you’ll be able to see the level of income your pension will provide if you retire at different points.

3. Assess how other assets may be used

Pensions are often the key to creating an income in retirement, but they’re not the only option. You may have other assets that can be used to fund retirement, such as savings, investments or property. How could these be used to supplement pensions? Knowing you have other assets to fall back on can give you the confidence needed to move ahead with plans. You also need to ask whether you’d be comfortable using other assets for retirement income. Perhaps you’d hoped to leave property as an inheritance or savings to pay for potential care costs.

Identifying a shortfall

As you assess your pension savings, you may find that you’re in a better position than you thought. However, you could also find a gap between your ambitions and savings. If this is the case, identifying the shortfall is the first step to creating a financial plan that combines your aspirations and financial situation. This is where financial planning can help you understand what steps may help.

  • Could you work longer than initially planned and still retire before receiving the State Pension?
  • Would a phased approach to retirement appeal to you?
  • Could you reduce your monthly outgoings or cut back on big-ticket spending?

If you hope to retire before reaching State Pension age and would like to understand the impact this will have on your financial security, please get in touch.

Please note: A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.

Are you taking enough risk financially?

Are you taking enough risk financially?

When you think of financial risk, it’s probably potential investment losses that come to mind. But not taking enough risk with your wealth can be just as damaging financially.

News that UBS, the world’s largest wealth manager, will introduce a penalty for clients that hold a large portion of their assets in cash accounts gives the perfect opportunity to look at whether you’re taking enough investment risk.

From November, wealthy clients of UBS will face an additional annual fee of 0.6% on cash savings of more than €500,000 (£458,000). The penalty rises to 0.75% for those with savings that exceed two million Swiss francs (£1.7 million). The minimum fee is €3,000 (£2,746) a year. A UBS client holding two million Swiss francs in cash would face an additional annual charge of 15,000 francs (£12,624).

The negative interest rates set by the Swiss National Bank and the European Central Bank are behind the decision for the new penalty. Negative interest rates mean cash deposits incur a charge for using an account, rather than receiving interest.

Whilst the UK does not have negative interest rates, they have remained low since the 2008 financial crisis. The Bank of England base rate is just 0.75% and has been below the 1% mark for the last decade. As a result, it’s likely your cash savings are generating lower returns than they may have in the past.

Why cash isn’t always king

You’ve probably heard the phrase ‘cash is king’ but this isn’t always the case.

Cash is often viewed as a safe haven for your money. After all, it won’t be exposed to investment risk and under the Financial Services Compensation Scheme (FSCS) up to £85,000 is protected per person per authorised bank or building society. If you’re worried about the value of your assets falling, cash can seem like the best option.

However, that’s a view that fails to consider one important factor: inflation.

The rising cost of living means that your cash effectively falls in value in real terms over time. In the past, you may have been able to use cash accounts to keep pace with inflation. But low-interest rates mean that’s now unlikely. Over time, this means the value of your savings is slowly eroded.

At first glance, the annual inflation rate can seem like it will have little impact on your savings. But, over the long term, the effect can be significant. Let’s say you had a lump sum of £10,000 in 1988. To achieve the same spending power 30 years later you’d need £26,122. If you’d simply left that initial lump sum in a cash account generating little interest, it’ll be worth less today.

Of course, that’s not to say there isn’t a place for cash accounts in your financial plan. For an easily accessible emergency fund, a cash account may be the best home for your savings, for example. Yet, in some cases, taking the right level of investment risk is essential for not only growing but maintaining wealth.

How much investment risk should you be taking?

Whilst holding your wealth in cash is potentially harming the outlook of your financial plan, you may be wondering how much investment risk you should be taking.

Unfortunately, it’s not a question we can answer here. It’s a decision that’s personal and should be made taking your circumstances and aspirations into account. For some people, investing in relatively low-risk investments that aim to match inflation will be the right path. For others, taking greater risk will be considered worth it when the potential for higher returns is considered.

When deciding how much risk your investment portfolio should take, areas to think about include:

  • The reason you’re investing
  • How long you’ll remain invested for
  • Other assets you have and the risk profile of these
  • Your capacity for loss
  • Where investing fits into your wider financial plan
  • Your overall attitude to risk

Understanding the level of investment risk that’s right for you and the portion of your wealth that should be invested can be challenging. This is where we, as financial planners, can help you. We aim to work with you to create a financial plan that puts your short, medium and long-term goals at the centre of decisions. If you’re unsure if you’re taking enough, or indeed too much, risk financially, please get in touch.

Please note: The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

4 things to consider when managing pension investments in retirement

4 things to consider when managing pension investments in retirement

Since 2015, retirees have had far more control over their pensions. Rather than purchasing an Annuity, more are choosing to leave their pension invested. This has benefits and can help you build a flexible income, but there are things to keep in mind too.

Figures from HM Revenue and Customs (HMRC) revealed that in the second quarter of 2019, retirees withdrew £2.75 billion from their pension flexibly. It represents the greatest amount withdrawn in a single quarter since Pension Freedoms were introduced. In total, £28 billion has been withdrawn flexibly over the last four years.

From the age of 55, you’re now able to start accessing your pension whether you’re ready to retire or not. One of the options open to you is Flexi-Access Drawdown. This is a pension product that allows you to make withdrawals that suit you, altering the amount and choosing the time. The capital that remains in the pension is typically invested. As a result, more retirees are now having to consider how to manage investments.

The pros and cons of Flexi-Access Drawdown

Before we look at managing investments in retirement, it’s important to recognise that Flexi-Access Drawdown isn’t the right option for everyone. As with all financial decisions, there are pros and cons to weigh up, as well as alternatives to explore.

Pros:
  • You’re in control of the income you take and when you make a withdrawal
  • As the money remains invested, there is potential for the value of your pension to increase
  • You can choose the level of investment risk you take with your retirement savings
  • It can provide you with a tax-efficient way to pass on wealth if your estate may be liable for Inheritance Tax
Cons:
  • You will need to take responsibility for ensuring withdrawals are sustainable
  • Investment can decrease in value and short-term volatility may have an impact
  • You will need to consider life expectancy when calculating how much can be withdrawn, as well as considering what will happen should you live longer than average
  • You will need to understand how withdrawal levels and when you make them will affect your tax position

If you have any questions about the pros and cons of Flexi-Access Drawdown, please contact us.

Flexi-Access Drawdown is still relatively new but analysis looking at the last four years suggests many retirees will have profited.

According to Aegon, an individual with a £400,000 pension taking a £20,000 annual income from day one of the Pension Freedoms would have seen their pot grow by £62,000 after four years in the ABI Global Equities sector. This is despite the impact of £80,000 of income payments. The same retiree invested in the UK Equity Income, Mixed Investment 20%-60% Shares sector average and Global Fixed Interest, would have seen some erosion to the capital. However, crucially, such erosion was less than the total income taken in all three cases.

The analysis illustrates how leaving a pension invested can deliver returns for retirees, but it should be noted that this will depend on individual circumstances and the assets the pension is invested in.

So, if you do decide to go ahead with Flexi-Access Drawdown, what should you keep in mind?

1. Risk profile

As your pension remains invested, it’s important to consider the amount of risk you’re taking. Traditionally, it was common to decrease the level of risk as your approached retirement age, when it was then withdrawn. However, longer retirement and changing lifestyles mean this isn’t always suitable for those considering how to access their pension today.

As with all investment decisions, the level of risk you take with your pension should consider a range of factors. This may include your overall attitude to risk, other assets you hold, how long you expect to be accessing the pension for and when you’ll make withdrawals. There’s no single solution to the level of investment risk you should take when retired, it’s one that should consider your personal circumstances.

2. Impact of volatility

Investments will experience volatility. But how should you respond to this when you’re withdrawing an income from it?

If you choose to, you can continue taking an income as you planned, despite volatility. However, this can mean your savings are depleted far more quickly than you planned and place future financial security at risk. Should investment values fall, for example, you’ll need to sell more units to achieve the same level of income. In turn, this can mean investment returns don’t meet expectations.

Adjusting the income taken in line with investment performance can help you stay on track and ensure your pension will continue to support you throughout retirement.

3. Financial safety net

Having a financial safety net is often cited as important during your working life and it’s no different when you retire. How will you cover unexpected bills or expenses? If investment performance falls, will you be able to reduce the income taken from a pension and still maintain your lifestyle?

If your retirement income is invested, it’s important to understand the financial safety net you have in place. It can give you peace of mind and the confidence to fully enjoy your retirement. A financial safety net is likely made up of different assets, but may include an emergency savings fund, the State Pension or a guaranteed income from a Defined Benefit pension.

4. Life expectancy

Using Flexi-Access Drawdown means you’re responsible for making sure your pension lasts for the rest of your life. That can be a daunting prospect and your life expectancy should be directly linked to the level of income you take. There are two important things to keep in mind.

First, most people at retirement age underestimate how long they’ll live for. According to a report from the Institute of Fiscal Studies, those in their 50s and 60s underestimate their chances of reaching age 75 by around 20% and their chance of reaching 85 by 5-10%. It’s a mistake that could mean you run out of money during your later years.

Second, whilst looking at average life expectancy can be useful, you should keep in mind many people exceed this. Thousands of people celebrate their 100th birthday every year in the UK and it’s a trend that’s on the rise. Your financial plan should consider what will happen if you lived longer than average, as well as how to pass on wealth that remains.

If you want to discuss how Flexi-Access Drawdown may suit your retirement plans, please get in touch.

Please note: A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.

The value of your investment can go up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

What to do if you think you’ll never retire

What to do if you think you’ll never retire

More people are paying into a pension than ever before. Yet, millions are still worried they’ll never be able to retire. If you have concerns about the retirement lifestyle you will be able to afford, there are often steps you can take to improve this.

First, the good news: the number of people saving enough for retirement has hit its highest ever level, according to Scottish Widows. Almost three in five Brits are deemed to be putting enough aside for retirement, calculated at 12% of an individual’s income. However, a worrying number expect they’ll never be able to afford to give up work. Around a fifth of people believe they won’t be financially secure enough to retire, equating to eight million individuals.

With fewer Defined Benefit (DB) schemes available, which offer a guaranteed income for life, individuals need to take more responsibility for their retirement finances. But the research indicates a large portion of the population don’t have confidence in the steps they’re taking.

Peter Glancy, Head of Policy at Scottish Widows, said: “While the past 15 years alone have proved that things have been changed for the better, auto-enrolment alone won’t avert a pension crisis in the UK. Government and industry need to take the next step together and also stop pretending the long-term savings challenge can be solved in isolation.”

6 things to do if you’re worried about pension savings

In recent years, the responsibility for creating a retirement income has shifted to individuals. The number of Defined Benefit (DB) pensions schemes has been falling. Also, Pension Freedoms mean retirees are now often responsible for how and when they access pension savings. As a result, it’s natural to have some concerns about how your retirement provisions will provide for you.

If you’re worried you won’t be able to afford retirement or are unsure of the lifestyle you’ll be able to enjoy, these six steps may help.

1. Assess your current savings

Whilst the Sottish Widows research highlights millions are worried about retirement, it doesn’t state how much these people have put away. It may be that some are in a better position than they believe, particularly when looking at the long term.

The first thing to do is look at the amount you have already saved. The majority of workers will have several pensions due to switching jobs; getting a current value for them all is important. This will give you a figure to assess whether or not you’re on track. Remember, most pensions are invested, and the value will hopefully grow between now and when you hope to retire. Providers will give you a projected value at traditional retirement age, however, this cannot be guaranteed.

2. Check contributions

Next, how much are you contributing to your pension? If you’ve been auto-enrolled into a pension by your employer, the minimum you contribute is currently 5% of qualifying earnings. However, you can choose to increase this. The end goal for pension savings can seem daunting, but it’s worth remembering your employer will also be contributing at least 3% and you’ll benefit from tax relief. These two incentives can significantly boost the amount you’re putting away.

With a baseline for how much you’re already putting away, you may want to consider increasing contributions. Even a small rise in how much you put away each month can have a big impact. When saving for life after work, a pension is often the most efficient way to save. Some employers will also increase their contributions in line with yours.

3. Don’t forget the State Pension

It’s not just your Personal and Workplace Pensions that will provide an income in retirement. For many, the State Pension will be the foundation. Once you’ve factored in how much you can expect to receive from the State Pension, the amount you need to take responsibility for can seem far less challenging.

The State Pension alone won’t usually provide you with enough to secure the retirement lifestyle you want. But it does provide a level of security and maybe enough to cover essential outgoings. How much you’ll receive will depend on your National Insurance record. To qualify for the full amount, paying out £8,767.20 annually in 2019/20, you’d need to have 35 qualifying years on your National Insurance record. You can check how much your State Pension is likely to be here.

4. Calculate other sources of income

Whilst pensions are the most common way to create an income in retirement, they’re not the only option. Other assets you’ve built up throughout your working life can also be used and may be important to your personal financial plan. Yet, when initially looking at how affordable retirement is, you may have missed these out.

Among the assets to consider are savings, investments and property. How these assets can be used in retirement will depend on your situation and goals, but it’s important they’re not overlooked. Even if you don’t intend to use them in retirement, knowing you have assets to fall back on if necessary, can give you the confidence needed to approach this important milestone.

5. Consider the costs of retirement

If you think you can’t afford to retire, what are you basing this on? If you’re looking at your current expenditure, you may be overestimating how much you need. Most people find their necessary income falls in retirement as some significant costs decrease. You may, for instance, no longer have a mortgage to pay or save each month on travel costs once you’re not commuting.

The cost of retirement is individual and is linked to your plans. Taking some time to figure out how much you need can help you identify if there is a shortfall or where adjustments can be made if needed. According to Which? research, the average retired household spends around £27,000 a year. This is made up of basic areas of expenditure (£17,800 annually) and some luxuries.

6. Speak to a financial adviser

We often find that people are in a better position than they think when they consider the above five factors. We’re here to help you pull together the different sources of income that can be used in retirement and understand how they’ll provide for you. Using cashflow modelling, we’ll be able to demonstrate how your current provisions will last throughout retirement and how changes to your saving habits will have an effect in the short, medium and long term. If you’re worried about financial security in retirement, please get in touch.

Please note: A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulations which are subject to change in the future.

Equity Release will reduce the value of your estate and can affect your eligibility for means-tested benefits.