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Home > Blog > Pensions > 10 Retirement Planning Questions To Ask Your Financial Adviser
At Hilltop, we know that planning for retirement tops the list of the nation’s biggest pension worries. If you are thinking about taking advice, it pays to have some questions in mind beforehand.
It can sometimes be difficult to know what questions to ask, so to save you some time, we have compiled the following list of 10 retirement planning questions to ask a financial adviser. You can use this handy checklist to ensure you get the most out of your retirement planning.
If you are approaching retirement, these are likely to be the most pressing questions on your mind. Our financial advisers can give you an accurate pension forecast and discuss strategies to help you maximise your savings.
Again, this is a big question that often requires professional advice. How much you need to budget will largely depend on your lifestyle. While it may seem enticing to retire as early as possible, sometimes it pays to wait.
As with much to do with retirement planning, this is quite a subjective question that will largely depend on your attitude to risk. A pension annuity can give you a guaranteed income for life, while pension drawdown can give you more flexibility over how and when you take your income.
However, as your pension pot is invested, pension drawdown does come with potential risk as movements in the market can affect the underlying investments.
So really, the big question to discuss with your Hilltop financial adviser is which form of pension income is likely to be the best option for you and your circumstances.
Any pension income you take over and above the tax-free lump sum that tips over the Personal Allowance (currently set at £12,570) will be classed as taxable earnings.
You should receive a notice from HMRC, which you will need to review carefully to ensure your codes are correct and you are paying the correct tax.
This can vary from provider to provider. It pays to plan ahead by checking the terms and conditions of your various pension schemes to ensure you can submit any claim forms in good time.
The current Government guidance regarding the State Pension is that you will normally receive your first payment within five weeks of reaching the State Pension age (currently 66 but rising to 67 between 2026 and 2028).
However, this is not an automatic process and must be claimed from the state.
Again, this really depends on your situation. Bear in mind that pensions provide tax relief on personal contributions and withdrawals (beyond the 25% tax-free threshold) are taxable. Whereas, you may have other investments where withdrawals can be made more tax efficiently.
Your adviser will be able to help you to determine the most tax-efficient income strategy for you.
The Marriage Allowance enables lower-income pensioners (who do not pay income tax or earn less than the Personal Allowance) to transfer up to £1,260 of their Personal Allowance to their spouse or civil partner.
For the partner in receipt of the transfer – who must be a basic rate earner (currently £12,571 to £50,270) – a £1,260 tax credit could be added to their Personal Allowance. This can potentially increase their annual allowance to £13,830, which could help to reduce the overall tax bill.
As you can see, this is a slightly convoluted system that is well worth discussing with your adviser.
This is a simple question with a complex answer. Largely, it depends on the type of pension you have, be it a defined benefit or defined contribution pension, and your age at the time of death.
It also depends on the rules of your scheme, whether or not you have begun taking an income, and your method of taking withdrawals.
Speak to your adviser, who will talk through the various scenarios, to find the best solution for you and your family.
This is an excellent question to ask your adviser.
Normally, the first port of call to free up funds from your property would be to downsize. This enables you to free up capital that you can potentially put to work for you, as opposed to paying interest on an equity release loan.
As such, equity release tends to be a ‘last resort’ option.
This is one question that many people would probably rather not ask. However, it is crucial to gain a realistic understanding of what your lifestyle expectations might be when you retire based on your pension forecast.
An analysis can be produced by your adviser to illustrate how the income you take will affect your savings.
Now that you have ten of the most useful retirement planning questions to ask your financial adviser, why not arrange a call with one of Hilltop’s experienced pension advisers today?
We can answer all these questions and more to enable you to make informed decisions regarding every aspect of your retirement planning. Contact us today on 0161 413 7051 for pension advice.
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