15th September is National Pension Awareness Day in the UK, with a whole week dedicated to pension awareness events. This is a hugely important subject so why not make September the month that you review your pension arrangements and work out whether you are retirement ready, even if you don’t live in the UK?
Reviewing your pension: the three big questions to ask
When you carry out a pension review, there are three main questions that you should be asking:
- How much pension do I need?
- How much do I have in retirement savings so far?
- Am I on track to meet my requirements once I retire?
The answers to these questions will change from year to year, which is exactly why it’s so important to carry out regular reviews. Let’s take a look at each question in turn.
How much pension do I need?
This is the million-dollar question! And complicated by one big, unknowable fact: none of us knows how long we are going to live.
What we do know is that life expectancy is increasing and more and more of us are going to clock up a century on this earth. When it comes to retirement, it’s best to err on the side of caution and plan for a long life.
There are certain questions you should consider when assessing your pension needs. These include:
- When do you want to retire?
- What are your expectations in terms of standard of living in retirement?
- Where will you spend retirement: abroad or back in your home country?
- Will you own your home or need to pay rent in retirement?
How much do I have in retirement savings so far?
It should be relatively simple to carry out an inventory of the assets you own. Don’t forget to include all investments, cash holdings, property, etc. If you’ve lost pensions, and many people have, you should ensure that you trace these now. For UK pensions, there is a dedicated pension tracing service.
Am I on track to meet my requirements once I retire?
This will, to some extent, depend on how much you can expect savings and investments to grow. It is important to invest in the most tax-efficient way to maximise return. If you have investments that have been neglected, now might be the time to review them with a financial adviser and make some adjustments to your portfolio.
Get help with your pension review
It’s not always easy to identify a shortfall between your projected needs and your current situation. One of the many benefits of working with a professional financial adviser is that they have the knowledge, expertise and tools required to analyse your situation quickly.
At Infinity, our advisers use sophisticated cash flow modelling software to flag potential issues with your retirement plan. This sample cash flow forecast demonstrates how:
The part in red shows that the individual concerned risks running out of money at the age of 73 based on current savings and future projected contributions. It is clear that if they do not increase their savings now, they are going to have to compromise at some point in the future – either by retiring later or surviving on less money once they have retired.
If you’d like to gain clarity on whether you are retirement-ready, why not make an appointment for a pension review with one of Infinity’s highly qualified and experienced consultants? That way, if you don’t have sufficient savings to cover your future needs, you can take action now to address the shortfall and ensure that you have the retirement you dream of.
Plan for the retirement you deserve – get in touch to review your pension savings today!
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