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Preparing for Retirement – One Size Does Not Fit All

The dictionary definition of “retirement” is simple enough. To retire is to leave the world of work behind and instead devote time to family, friends and also pursue personal passions, hopefully, supported by appropriate pension arrangements.   

But perhaps that’s too simple. Certainly, many people do see retirement as an event that represents a complete change of life. To others, it may be more of a process. For the CEO, an impending retirement might mean relinquishing that particular job title, but retaining a seat on the board and perhaps taking a number of other non-executive directorships or mentoring assignments. Thus, retirement certainly means doing less, but not necessarily giving up business life completely. In truth, ask ten individuals about their concept of retirement and you will probably get ten slightly, or radically, different answers.

There is a huge variation in the way that individuals prepare for retirement too. There are entrepreneurs who make little traditional provision – instead, seeing the sale of their companies as the point at which retirement becomes a viable option. From an advisor’s point of view, that may be a high-risk strategy, but it’s not uncommon. Equally, many high earners secure their futures through generous occupational schemes, augmented by top-up plans and a range of other investments. Others make their own investment arrangements, which may or may not include traditional pension plans.  

In other words, just as the concept of “retirement” means different things to different people, there are also many ways to set about doing the financial groundwork  – some, it has to be said, riskier than others.

If there is a common factor, it is simply this. As retirement age approaches – whether provisional or fixed – there are questions that have to be asked. And the answers will not only depend on the groundwork already put in place – in terms of investment and assets – but also what lies ahead in the form of life goals and ambitions.

Deciding on Goals

But what does that mean in practice? Well, perhaps the best and most logical place to start is to think carefully about what retirement actually means to you as an individual and to those around you.  

When do you plan to retire? Does your chosen retirement date herald the start of a completely new life – and if so, how do you want that new life look? Do you, for example, want to continue living in your home country, or would you like – for part of the time at least – to relocate to somewhere where the sun shines more regularly?  

And what sort of lifestyle do aspire to? Will life – in terms of outgoings – continue pretty much as it is at the moment, or are you planning to retrench a little? Conversely, will retirement actually trigger higher spending on the pursuit of interests?

Will active investment – perhaps as an angel – play a part in your plan?  

Looking beyond your personal goals, it’s important to consider those around you in terms of their lifestyle and assets you would like to leave to your children or spouse. Related to this is the question of how income for your family can be protected, through life insurance and the pension plan provisions.  

Auditing Your Assets

The answers to questions such as these naturally feed through to an assessment of the financial realities. You know – or at least a plan is beginning to crystalise – how you plan to spend your retirement. From there you begin to look at whether the financial assets you have at your disposal, will deliver on your goals for the years ahead.

Typically, you may have either one or more final salary pension schemes, or a pension plan that will purchase an annuity. Either way, there is a regular income in play. In addition, there are likely to be assets such as property and a range of investments that deliver income and/or growth. The question is whether your current asset allocation strategy is optimal in terms of life goals.

Ahead of retirement, you should be looking at the performance of your assets through the prism of post-retirement plans and take appropriate action where necessary. After retirement, investments and other assets should be reviewed regularly to ensure they are still performing as required and also aligned with any changes to your lifestyle and ambitions. And there may be a case for seeking out new investment opportunities.  

Estate Planning

Sitting alongside this, it is also important to audit your assets for the purpose of the kind of estate planning that will ensure your wealth is passed on to surviving children and family as you intend. This is not simply about making a will. It is also important to value your assets and set them against liabilities, such as outstanding debts. There may be scope to gift assets to others – to reduce inheritance tax – but this must be done carefully to comply with HMRC rules, while also ensuring that you retain what you need for a comfortable lifestyle.

It is, of course, equally important to manage down your ongoing tax liability – again, staying within the letter and spirit of the law.  

How The Route – City wealth club Can Help

In many respects, the decisions facing retirees are not dissimilar to those facing all High Net Worth individuals. The same principle applies – decide on your goals and develop an appropriate financial strategy. However, it can be a complex undertaking.

The Route – City wealth club understands that complexity and works with its Members to create bespoke financial strategies that embrace investment opportunities, financial planning, estate management and tax advice. All Members receive two financial reviews each year to ensure that the needs of the individual and the wealth management strategy remain aligned.

To find out more about Membership, please call: 020 3141 9040


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