Retirement planning is something that everyone has to start sooner or later – and overall, it is better to begin sooner. We all come to the point where we can no longer go on working and this must be prepared for. The alarming thing is the low number of people in the UK who are aware of this and are talking to a professional about their retirement.
Most people do not consult a financial advisor, with many seeming to imagine that they will rely solely on their pensions. In a lot of cases, people will be left short of the income needed for a comfortable retirement. However, research by Standard Life found that only two out of every five people who were retiring within 12 months had spoken to someone who could help them formulate a plan.
Read on to learn why this is something you really should consider doing now.
What exactly is a financial advisor?
A financial advisor is someone who will help an individual to work out what they want to do in the future and then put together a plan for accomplishing it. One of the areas that they most commonly help clients with is retirement planning. They do this by getting the client to think about what sort of life they want after they stop working and then calculating the income and savings that will be needed.
After that, a plan will be made up that usually consists of a combination of saving, asset growth through investment and tax mitigation strategies. A qualified financial advisor will have in-depth knowledge and expertise in all of those areas.
How can they help you with retirement planning?
These are some of the reasons why you should talk to retirement planning specialists in Shropshire or wherever you live.
Clarify what you need and want
You may think that you can work out for yourself what you want to do in the later stages of your life. To some extent, this is probably true. However, the best time to begin planning for retirement is when you are still fairly young, because then you will have more time to build your assets, and it can be hard to think clearly about retirement at that age. Talking to a professional can help to focus your thoughts.
Furthermore, it can be easy to forget important things if you do not have professional guidance. For example, many people do not consider money they might want to leave for any children they have down the line or the costs of healthcare. An advisor is trained to remember the whole picture.
Set a retirement date
It is possible that you already have a vague idea in your mind of when you would like to retire, but without working alongside a financial advisor on a proper plan, it is likely to remain just that. For it to become a practical reality, you need to know just how much money will be required for your preferred post-work lifestyle and to have a plan for growing your assets to ensure you have the necessary savings and income.
The earlier you do so, the more time you will have to save and invest. Doing this can allow for a better balance of high- and low-risk investments. By contrast, if you are starting to plan later in life, your advisor will have to look for higher risk investments with the potential for greater rewards to make up for lost time.
Prepare for every eventuality
Retirement planning was simple in the days when people worked for the same company all their lives, but in 2023, it can be a complex affair. It will encompass pensions and other savings, but also potentially property and investments across several asset classes. The job of a financial advisor is to put together a portfolio that can help you to achieve your retirement dreams but also fit your personality type, including the level of risk that you are comfortable with.
The plan and the portfolio may also need to be reworked at different points as your circumstances alter. The lives of people tend to change more frequently now and that makes retirement planning an ongoing project rather than a one-off plan.
Avoid heavy tax liabilities
If you are not careful, your growing assets could be affected by the tax system. A good financial advisor will understand this system in detail and be able to help you reduce burdens such as inheritance tax. They can also help with the best way to save from a tax perspective, whether it is into a pension or an ISA, which will depend on your age.
There are lots of good reasons to talk to a financial advisor when planning for retirement and very few good reasons not to.