5 ways a financial planner can help you if you’re approaching retirement


older worker takes notes working from homeIf you’re approaching retirement, you may be thinking about how far your pension is going to take you. No matter your situation, contacting a financial planner can help you better understand and prepare for your retirement journey.

From giving you financial confidence, to boosting your mental health, and estate planning, the benefits a planner can have for you and your finances are numerous.

However, a study reported in MoneyAge revealed that just 14% of those aged over 55 take regulated, professional financial advice before retiring.

So, here are five different ways a financial planner could help you if you’re approaching retirement.

1. They can help you understand what you want from retirement

Everyone has a different idea of what they want to do when they stop working. A planner can be there to help you work out all your plans for retirement, and whether they are financially feasible. They can act as a sounding board for your retirement goals and help you decide how to approach them.

Whether you want to go travelling, save as much as you can for your family, or look for alternatives to the traditional cliff-edge retirement method, your planner can be there to help you work it out.

For example, we discussed in a previous article the recent rise of the “phased retirement” method. By taking a phased approach, you can slowly reduce your working hours, change job roles, or become a freelancer to transition out of working life more gradually.

This way, you can still see your colleagues every week, keep yourself entertained, and earn a reduced income, all while getting a taste of the freedom that comes with retirement.

2. They can give you a greater sense of confidence and reassurance

A common worry for retirees is that they might not have enough to live the lifestyle they want. Luckily, a financial planner comes prepared to work out your finances and can help reassure you that you have the money to achieve your financial goals.

Tools like cashflow forecasting can help you to rest easy, knowing that you’ll have enough to enjoy the lifestyle you desire. By mapping out your predicted expenditure and income, a planner can make a reliable forecast of your wealth and see how long it should last when living the way you want to.

Cashflow forecasting helps you to form a solid budget and know exactly how far your money can take you. It can also help you if you want to retire early, as a financial planner could use your financial situation to determine the point at which an early retirement becomes feasible.

3. They can reassess your exposure to investment risk

As you approach retirement, your attitude towards investment risk may change. Throughout your life, you may have had a high tolerance to risk, but maybe as you approach retirement you want your money to be a little more stable and reliable.

Alternatively, perhaps you’ve always preferred to be safer with your investments, but your money isn’t growing at the rate you were hoping, and you may not have enough to see you through.

In these cases, speaking to a planner can be vital in helping you assess your investments and determining whether your strategy needs to change.

If your risk tolerance is too low, your savings might not get you through retirement as expected, and your planner may recommend a riskier strategy.

The opposite is also true, where they may advise you to take a more stable route as you stop working to ensure that your investments don’t drop in value when you need them most.

4. They can help you with your estate planning

Estate planning is one of the most difficult financial situations to prepare for, but a planner can help you take the steps needed to reduce your Inheritance Tax (IHT) bill and ensure your wealth is passed to those you want. While it isn’t easy to think about, it is crucial to plan for.

A financial planner will break down important considerations surrounding IHT, such as the nil-rate band, and establish whether you’re likely to have an IHT liability. From there, they may advise you make gifts in your lifetime to reduce the overall value of your estate.

They may encourage you to write or revise your will so that they know who you want your beneficiaries to be. Then they can work out a way to tax-efficiently manage your estate.

5. They can help you to draw your income in a tax-efficient way

If you draw too much of your pension too quickly, you may accidentally trigger additional tax charges. Once you turn 55 (or 57 from 2028) you can gain access to your pension. Once you do, you can typically only take 25% of your savings tax-free, and the rest could be subject to Income Tax.

This could be an issue if you want to take a large amount of your pension in a lump sum. For example, if you take a significant sum in one go, you may push yourself into a higher tax bracket and pay more tax on your pension than you had initially thought.

By working with a financial planner, you can avoid any potential tax implications and ensure that you get the most out of your wealth.

Get in touch

If you want to find out more about how a planner can help you in your approach to retirement, please email info@investmentsense.co.uk or call 0115 933 8433.

Please note

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The value of your investment (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available. The tax implications of pension withdrawals will be based on your individual circumstances. Levels, bases of and reliefs from taxation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.