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We will all stop working eventually, but how you plan for retirement will largely influence when this will be and the level of income you can expect.

Saving for retirement

For many people, retirement planning simply means contributing to pensions, savings or other investments. But aimless saving is unlikely to achieve your desired outcome. Good retirement planning should consider, amongst other things, the following:

  • When do you plan to retire?
  • What are your needs and aspirations in retirement?
  • Will you require income or a capital sum, or a combination of the two?
  • How much will any existing retirement savings provide?
  • Is your target realistic and affordable, or do you need to reconsider your plans or retirement age?

Unless you’ve considered your needs and aspirations in retirement, you won’t have an accurate idea of how much you’ll need to save, and if you don’t know this, then you can’t say with any certainty that the projected income or lump sum from any existing retirement savings will be sufficient.

Our job is to help you plan for retirement by having a full understanding of your personal circumstances, your attitude and tolerance to risk as well as your goals both before and at retirement. We make personalised recommendations to help you plan effectively and realistically in the most tax-efficient way.

And because your circumstances can change throughout your lifetime, it’s important that you keep your retirement savings under review in the future to make sure you stay on course.

So, perhaps you’re already saving for retirement or are looking to start, and you need help deciding how much you should be saving, or where to invest. Or maybe you’ve already built up significant pension savings, but have concerns about breaching Annual Allowance or Lifetime Allowance limits and need advice on protecting your retirement savings, or on alternatives to pension savings. No matter what your circumstances, we’re here to help you plan effectively for the lifestyle that you look forward to in retirement.

View details on our charges for advice on retirement planning.

Options at retirement

Following the change to the pension rules in April 2015, you now have almost complete flexibility to do what you want with your pension savings. However, given the importance of ensuring you have sufficient money to last you the rest of your life, it’s important you understand the implications of each of the options available to you. The main options you will have are:

  • Purchase an annuity – a guaranteed income for life
  • Flexible access – take income and lump sums as and when you need, with no limit

With the change to the pension rules, many people believed annuities would cease to exist, given it is now possible to take your entire pension fund out in cash. Depending on individual circumstances, we believe annuities still play a key role in providing the reliable lifetime income needed to ensure your basic expenditure is covered in retirement. We do, however, believe more and more people will benefit from a blending of options, giving them both the safety provided by an annuity, and the flexibility to take additional income or lump sums through flexible access.

Everyone’s position and needs at retirement will be different, but a typical example of how someone could structure their income from pension savings might be:

  • Use part of their pension fund to secure an annuity to cover fixed outgoings such as household expenditure, food, bills, clothing, leisure and holidays;
  • Take into account existing or future state pension income;
  • From the pension fund remaining after annuity purchase, draw an income directly from the fund for additional spending, increasing and decreasing income as required;
  • Draw one off lump sums directly from the fund for important outlays such as paying off a mortgage, buying a car, or helping a relative get onto the housing ladder or start a business
  • Remaining fund is invested to provide flexibility for future income needs, e.g. long term care costs.

We’ll now look at annuities and flexible pension access in more detail.


An annuity is simply the promise to pay you a certain amount of money for as long as you live. It is secure, can be guaranteed for up to 10 years and can be increasing in payment.

There are many factors that will affect the level of annuity income that you receive at the outset and throughout your lifetime, which include:

Your health

Certain lifestyle factors or medical conditions may mean that you qualify for an enhanced annuity rate, meaning that you will receive more income from the outset compared to a standard rate. Examples can include high blood pressure, diabetes, as well as more serious medical conditions.

Dependant’s benefits

Providing income to a dependant on your death reduces the initial level of income.

Inflation protection

Increases in payments will reduce the initial level of income.

Guarantee periods

To help protect the value of the annuity, a guarantee period means that the full annuity income continues to be paid for a minimum period in the event of an early death.

Because buying a lifetime annuity is an important decision, and annuity providers vary so much in how much they will offer, it is vital to shop around to make sure you get the best rate possible. Most people still don’t realise that you don’t need to buy an annuity from your pension provider. You have the right to an ‘Open Market Option’ which means you can buy your annuity from any provider in the market – a bit like shopping around for the most competitive car insurance deal.

We can help by ensuring your personal circumstances, plans for retirement and core income requirements are considered before recommending the level and type of annuity that we believe best suits your needs.

View details on our charges for advice on retirement planning.

Flexible access

Flexible drawdown or partial pension encashment, means you can take what you like when you like from your pension fund. It is far more flexible than an annuity in that you can decide how much income to draw from your fund, and could, for example, increase or decrease your income according to needs, and take lump sums if required. However, given your pension fund will remain invested, you will need to make sure you continue to monitor your fund and manage your withdrawals to ensure you don’t run out of money in retirement.

Accessing your pension fund in this way is usually more suited to those with larger pension funds who can afford to take greater risk with their income in retirement, or to those with secure income provided from their state pension and defined benefit schemes who may not be relying on the money they have saved into a personal or company money purchase scheme.

Developing the right approach

Taking into account your personal circumstances, we can help you to understand how much income you need in retirement, where this income will come from, and how you can make sure you won’t run out of money in retirement. We can also help you to structure your income and lump sums in the most tax efficient way possible.