The run-up to retirement

Updated: Sep 20, 2021

Many of us embrace retirement with gusto and adopt the view C. S. Lewis once suggested, “You are never too old to set another goal or to dream a new dream”. Yet for others, the reality of moving from a busy routine to life in retirement can feel daunting. So, what should you consider as you approach retirement?

Julian Morgan, the founder and Managing Director of Fleet Street Wealth, provides some answers

Fail to plan…

While spontaneity has its place, a good plan increases the chance of success. As you approach retirement, think about the life you want. You might take up a hobby, a sport or do your bit for charity, for example. You’ll need to calculate the cost of this new life and consider the financial aspects of potentially moving house and downsizing. Remember you may wish to live nearer town so that amenities are more easily available and provide a place not just for your children but for your grandchildren to stay when they visit.

Organising your finances

Taking financial advice becomes even more critical as retirement approaches. During your final working years, a financial adviser can use cashflow modelling software to help determine the level of sustainable income that could be generated from your existing pension and other existing investments during retirement. This may encourage you to temper your spending or identify surplus assets that could be disposed of before the taxman takes his share.

A financial professional can also help minimise your tax liability on your retirement income. A well-diversified investment portfolio, with funds in pensions, ISAs, general investment accounts, offshore bonds and Venture Capital Trusts (all of which have their own specific tax treatment), enables you to turn your various income streams on and off according to the prevailing tax treatment, helping minimise your tax liability.

Now is also the time to review your level of investment risk and consolidate pensions and investments to facilitate easy management. As well as lowering costs, consolidation can be useful for those at risk of breaching the pension Lifetime Allowance. Whilst retaining your overall asset allocation, your adviser should help you allocate lower risk and correspondingly lower growth assets to your pension (thereby limiting growth within this plan and reducing the chance of breaching the threshold) whilst allowing the higher risk and higher growth assets to grow unrestricted within ISAs and other plans.

Looking after your wellbeing

In older age, susceptibility to illness and injuries increases. Age UK suggests that one looks to build up their fitness within five years of retirement. Focusing upon a hobby or taking out membership at a club will help provide structure and increase the chances of you adhering to your fitness regime. It is equally important to look after your mind and minimize stress. Continued learning is a good option.

Most importantly, ensure your affairs are in order, that your pensions and investments are well managed, that tax is mitigated and above all have fun in retirement.

Fleet Street Wealth is a trading style of Fleet Street Financial Ltd which is authorised and regulated by the Financial Conduct Authority.