One of the biggest challenges in modern life is planning for retirement. It’s something many of us try not to think about, but really, we should. Lifestyle in retirement is becoming more of a concern and specifically, that any income is flexible and will be enough to meet our lifestyle needs.
So taking into consideration the increasing need for flexible income in retirement, it is important therefore to review any current pension arrangements, making sure that what you have will provide the flexibility in retirement that you desire.
The 2 main types of pensions, defined benefit (final salary) and defined contribution offer different options at retirement. If you have a defined benefit scheme, this will provide you with a guaranteed income for the rest of your life and then usually 50% of your benefit on death to your spouse. This is an attractive scheme and those who participate in one are in many ways the lucky few. Civil servants and NHS workers are the main beneficiaries of these types of schemes though some private companies also still operate something similar, such as Bombardier and BT. However, the downside of these schemes is a lack of flexibility. The options at retirement are very limited. Defined Contribution schemes, on the other hand, can provide the flexibility that you desire. However, there is no guarantee of benefit and the income received will depend on the performance of an investment fund, which can of course go down as well as up. If your Defined Contribution scheme, suffers a large drop the year before you retire, then your income in later years could be considerably less that you expected.
The choice therefore is a personal one, guarantee over flexibility. This is where advice from a qualified and appropriately authorised pension specialist is crucial. The average size of pension in the UK is now double the average house price, making what you do with your pension at retirement the biggest financial decision you will ever make.
Call us now for a first initial free consultation on 028 9073 5852. Or Visit us online Newbridge Financial Planning
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