Retirement isn’t as simple as it once was. Nowadays, there’s much more flexibility when it comes to taking money from your pension savings but that comes with its own complexities and tax considerations. And, while that gives you lots of choices, it can also raise questions. With important decisions to make, options to understand and questions to answer, planning your retirement can feel quite overwhelming – particularly as the rising cost of living can have a significant impact on many people’s financial plans.
And for many people, retiring is a hugely significant life event, often the biggest change since entering the world of work. That’s where retirement advice can be so valuable. Having an adviser on hand can help provide important clarity, peace of mind and emotional support at this time. They can also help make the big decisions easier by explaining all of your options and giving you the confidence that you’re making the right choices in the best and most tax-efficient way for you.
Maximise the value of professional advice
Worryingly, our research indicates that fewer than one in five retirees have sought professional advice. Instead, they rely on a variety of sources, such as friends, partners, and employers, to shape their retirement plans rather than benefiting from professional guidance.[1]
On the other hand, recent research from Royal London in 2024 reveals that 66% of clients who received financial advice rated their adviser at seven out of ten or higher for value – that’s up more than 10% since last year. Although this research wasn't limited to retirement advice, it shows that consumers paying for advice increasingly feel they receive good or excellent value for money.[2]
Let's explore some key ways to maximise the value of having a financial adviser by your side at retirement:
Key questions an adviser can help you answer
- When can I retire?
If you’re approaching retirement, it’s normal to be a little apprehensive about inflation, interest rates and the effect the rising cost of living might have on your lifestyle in retirement.
That’s where an adviser can help. They can help you find a realistic retirement date based on your total income and outgoings. Once you’ve added up all of your potential sources of income – not just your pension savings – you might find that you can retire earlier than you think, or that you can reduce your working hours and retire gradually.
Even if you don’t plan to retire right away, an adviser can help you understand when you can afford to do so.
- How much income could I have each year in retirement?
An adviser will look carefully at all your sources of income to determine how much you’ll be able to take each year while aiming to make sure you still have enough to last as long as you need it to.
Sources of income can include pensions, your state pension entitlement, as well as any savings or investments such as Individual Savings Accounts (ISAs) you have. And if you have rental income coming in from a buy-to-let property, they’ll take that into account too, along with any equity in your home that you’re prepared to release, either through downsizing or equity release.
- Can I still afford my lifestyle?
This is a common question that most people will ask themselves when it comes to retirement. And it’s a difficult questions to answer because there’s no one-size-fits-all solution. The answer will depend on your unique circumstances, including your current lifestyle, financial position, and future plans. Additionally, external factors like inflation and investment performance, which are beyond your control, will also play a role.
You might think retirement is the time when you need to cut back on things like buying new cars or putting in that new kitchen. But that’s not always the case. By looking carefully at all your sources of income, your adviser can create a plan that makes sure you have enough money to cover the basics but also allows for some of life’s luxuries. By using cashflow modelling, a financial planner can provide you with a much clearer view of your financial future and help you find answers to the important questions.
- How can I make my retirement income last?
Your retirement income may need to last you 30 to 40 years, or even more. And when you consider inflation, it’s so important to make sure your money is working as hard as possible for you.
By keeping some of your money invested in retirement, you’ll be giving it the potential to continue to grow in value and beat inflation. An adviser can help make sure that your money is invested the right way, and that your investments remain on track and in line with your retirement plans.
Remember that the value of all investments can go down as well as up, and you may get back less than you paid in.
- How much tax should I be paying?
Paying too much tax in retirement is an easy trap to fall into. For example, by taking more out of your pension savings than you need, you may end up paying more tax than you have to. A financial adviser can help make sure that you take your retirement income in the most tax-efficient way possible.
Remember though that tax and legislation may change, and your own individual circumstances, including where you live in the UK, will have an impact on your tax treatment.
Financial advice is accessible and affordable
Nowadays, financial advice can be very accessible and affordable. You can even get advice from the comfort of your own home, with many providers now offering online and phone support at a time that suits you.
While there’s generally a charge for advice services, this could pay for itself in the long run by way of improved returns on your money, tax savings and, importantly, peace of mind. A study by the International Longevity Centre found that people who take advice are, on average, £47,000 better off in retirement than people who don’t.[3]
Find out how abrdn's financial planning services could help with your retirement planning. With the right advice and plans in place, you too could make much more of your retirement income and get the peace of mind to properly enjoy your retirement.
The information in this article should not be regarded as financial advice. Please remember that the value of investments can go down as well as up and may be worth less than was paid in. Tax rules can always change in the future. Your own circumstances and where you live in the UK could have an impact on tax treatment. Information is based on abrdn’s understanding in November 2024.
abrdn Financial Planning and Advice Ltd is registered in England (01447544) at 280 Bishopsgate, London EC2M 4AG and authorised and regulated by the Financial Conduct Authority.