![\"\"](\"http:\/\/www.wealthatwork.co.uk\/bt\/wp-content\/uploads\/sites\/39\/2023\/12\/shutterstock_1827770870-scaled.jpg\")
<\/p>\n<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
The current economic environment is causing disruption to the retirement plans of many. It is important that those retiring in 2024 understand their options, make informed decisions, and avoid making mistakes with their hard-earned savings.<\/p>\n
To help, WEALTH at work, a leading financial wellbeing and retirement specialist, has created a list of top tips for those who are thinking about retiring in 2024.<\/p>\n
People should start by working out what they think they will need to meet their day-to-day living expenses (such as household bills) and discretionary expenditures (such as holidays and hobbies) in retirement.\u00a0 Current outgoings are a good place to start when working this out.\u00a0 In retirement, many will probably be paying significantly less income tax, no National Insurance or pension contributions, and mortgages may be paid off, but other costs may be higher such as heating bills as retirees may spend more time at home. They then need to work out the value of their savings and investments including pensions.<\/p>\n
There are 2.8 million lost pension pots sitting unclaimed because they\u2019ve been lost or forgotten about. Some of the main reasons include moving jobs, or people moving house and not updating their address with their pension provider. However, there are ways to locate lost pensions. This includes using the Government\u2019s Pension Tracing Service (www.gov.uk\/find-pension-contact-details<\/a>) and putting in either the employer or pension provider details. If the company no longer exists they can contact\u00a0Companies House(https:\/\/www.gov.uk\/government\/organisations\/companies-house<\/a>), or if they worked for a charity they can contact the\u00a0charity register (https:\/\/www.gov.uk\/find-charity-information<\/a>).<\/p>\n They should then ask the provider for an up-to-date statement, so they know how much their pension is worth. For those who have several schemes and struggle to keep track of them all, it might make sense to consolidate them.<\/p>\n Once someone understands their financial situation, they would then need to consider if they have enough saved to be able to afford to retire. According to the Pensions and Lifetime Savings Association (PLSA), a single person will need about \u00a312,800 a year to achieve the minimum standard of living (this would cover all a retiree\u2019s needs plus enough for some leisure activities such as a week\u2019s holiday in the UK and eating out occasionally); \u00a323,300 a year for a moderate standard of living (one foreign holiday a year and more frequent eating out); and \u00a337,300 a year for a comfortable standard of living (this would cover all a retiree\u2019s needs plus two foreign holidays a year and some luxuries such as regular beauty treatments). For couples, it\u2019s \u00a319,900, \u00a334,000 and \u00a354,500, respectively.<\/p>\n Research has found that most people live longer than they expect. The Office for National Statistics (ONS) estimates that the average life expectancy in the UK for people aged 65 will be 85 years for men and 87 years for women. People should keep this in mind when planning for retirement.<\/p>\n Many people think of their pension as their only source of income in retirement, but other assets such as cash ISAs, savings and investments can be used. For example, if taking money from a pension brings someone into a higher income tax bracket, it might be worth them taking the extra money needed from their taxable savings instead. With careful planning, it may be possible to avoid paying unnecessary tax which means more income in retirement.<\/p>\n If someone is worried that they haven\u2019t saved enough, it may be worth delaying retirement or continuing working part time. This would enable them to make more pension contributions, and they would be able to take advantage of tax relief and employer contributions for longer to build up their savings. In fact, the ONS reported that nearly 100,000 of retirees actually returned to work in the twelve months leading up to March 2023.<\/p>\n Those who have a defined contribution (DC) pension are able to access their savings from age 55 and will need to decide whether they want to do this through income drawdown, buying an annuity, taking it as a cash lump sum, or a combination of these options.<\/p>\n However, for those with defined benefit (DB) pensions, the income is usually based on a rate set by the scheme (the accrual rate) and typically is a percentage or fraction of their salary for each year they have been an active member of the scheme. There is usually a set retirement age such as someone\u2019s 60th<\/sup>\u00a0or 65th<\/sup>\u00a0birthday; however, they may be able to receive benefits earlier or later than this.<\/p>\n Some people may want to transfer their DB pensions into a DC pension fund so that they can have greater flexibility over their savings. However, people must understand the advantages and disadvantages of this first. Employees will need help to understand their options, and which might be the best for them.<\/p>\n Usually, only the first 25% of a DC pension is tax free (the calculation for a defined benefit scheme will be different); the remaining 75% is taxed as earned income. Unfortunately, some people don\u2019t understand this and decide to take their pension as a cash lump sum, not realising that it makes them a higher rate taxpayer.\u00a0 It may be better for them to take smaller amounts each year from their pension, keeping within their tax bracket, and then top it up with withdrawals from other savings.<\/p>\n It is important that people shop around before they purchase any retirement products. In 2022 Which? found that the difference in growth between the cheapest and most expensive drawdown plans for a \u00a3260,000 pot (the average pot value) was nearly \u00a318,000 over a 20-year period. Individuals should not only check charging structures, but make sure it suits their needs, and that they can withdraw cash as and when they want it, and for as long as they need it.<\/p>\n Pension scam victims lost more than \u00a326m in recent years. Whatever someone is planning to do with their retirement savings, it\u2019s vital they check whether the company that they\u2019re planning to use is registered with the Financial Conduct Authority (FCA) https:\/\/register.fca.org.uk\/<\/a>. They can also visit the FCA\u2019s ScamSmart website which includes a warning list of companies operating without authorisation or running scams. www.fca.org.uk\/scamsmart<\/a>.<\/p>\n It is vital that individuals fully understand their retirement options, to choose what is right for them, and getting financial education, guidance and advice at retirement can really help. Pension Wise offer free appointments to talk about someone\u2019s pension options. The workplace is also a great source of support with 68% of employers already offering or planning to offer pre-retirement planning for employees[1]<\/a>.<\/p>\n Some employers even offer access to a regulated financial adviser who will look at all of someone\u2019s assets and work out the most tax efficient way for them to fund their retirement before putting a bespoke plan in place. As cognitive decline during retirement may make it more difficult for some people to make appropriate decisions about how to access their savings in their older years, ongoing advice may be needed to support individuals throughout retirement.<\/p>\n Jonathan Watts-Lay, Director, WEALTH at work, comments; <\/strong><\/p>\n \u201cThe rising cost of living is understandably concerning for those due to retire in 2024. They need to work out how much they are actually going to need, and if they haven\u2019t saved enough, what their options are.\u201d<\/p>\n He adds; \u201cWe spend many years saving for our retirement and deciding how to manage this money is one of the biggest financial decisions people make. It is heart-breaking when people make mistakes with their hard-earned savings which could have been so easily avoided. This is why many employers now offer retirement support including access to financial education, guidance and regulated financial advice for employees, so it is always worth speaking to them to find out what help is available.<\/p>\n\n
\n
\n
\n
\n
\n
\n
\n