Introduction
At Transform FP, we’ve guided hundreds of clients through one of life’s most significant financial transitions — retirement. And while many assume retirement planning is all about pensions, it’s about so much more: security, confidence, and making your money support the life you truly want. As an independent Financial Planner, Angus Kirk has seen the difference that good advice can make — especially when it’s timely. In this article, Angus walks you through seven key reasons to seek professional advice as you approach retirement.
Reluctance to Seek Expert Advice
Some of the decisions you make as you retire could affect your income and lifestyle for the rest of your life. Yet, data suggests that many retirees aren’t taking financial advice and it could mean they face hardship in the future.
According to the Great British Retirement Survey, only 27% of retirees in 2021 sought the services of a professional financial adviser.
Separate research shows that many people prefer a DIY approach when managing their finances. A Scottish Widows report found that almost half of households have never accessed professional financial advice.
While financial advice that’s tailored to you can be valuable throughout your life, it can make a huge difference when you make milestone financial decisions. If you’re nearing retirement and haven’t sought the support of an expert, here are seven compelling reasons to do so.
1. Understand Your Different Pension Options
One of the big decisions you’ll need to make when you retire is how and when to access your pension. If you have a defined contribution (DC) pension, you are responsible for ensuring it will provide an income for the rest of your life.
There are several options you will need to weigh up. These include purchasing an annuity to create a guaranteed income or taking a flexible income. Even if you have a defined benefit (DB) pension, which provides a regular income for the rest of your life, you may still need to make important decisions. For example, you may have the option to take a lump sum out of your pension if you accept a lower income. These decisions can have a lifelong effect and may be overwhelming. A financial planner can explain the options to you and demonstrate what they would mean for your retirement.
“The biggest risks often arise from rushed decisions. Retirement planning is about creating a strategy that supports your lifestyle today and adapts for tomorrow.”
— Angus Kirk, Independent Financial Planner, Transform FP
2. Consider How You Could Use Other Assets to Create an Income
While your pension plays a crucial role in creating a retirement income, you may want to use other assets too. Pulling together these different sources, from property to investments, can be complex. You will need to consider which sources to access first, the tax implications of doing so, and ensure you don’t deplete the assets too quickly. A financial planner can help you bring together all these different elements to provide security in retirement.
3. Have Confidence That Your Assets Will Last a Lifetime
Retirement can last several decades, and it can make managing your finances challenging. Running out of money in retirement is a common fear. According to abrdn, almost half of retirees are concerned that they will face a shortfall. A financial plan can help you see how the decisions you make at the start of retirement will affect the long term.
A professional can also help you consider how your income needs may change during retirement through cashflow modelling. This may be because of your lifestyle goals or outside factors, such as rising inflation.
Inflation is high – it was 9.9% in the 12 months to August 2022. Retirees that didn’t consider how they’d cope if the cost of living increased may find they’re struggling or are depleting assets faster than expected.
“We use cashflow modelling tools to help clients visualise their financial future. It transforms retirement planning from guesswork into clarity.”
— Shadi Kirk, Independent Financial Planner, Transform FP
4. Check You’re Making the Most of Tax-Efficient Allowances
Tax efficiency can help you get the most out of your income and assets when you retire. Do you know how to spread pension withdrawals to minimise the Income Tax you will be liable for? Or what tax you could be liable for if you dispose of some assets? A financial planner can help you understand the taxes that affect you and the allowances you could make use of. If your estate could be liable for Inheritance Tax, being proactive could ensure you leave more for your family.
5. Consider Your Long-Term Security
Even when you carefully create a retirement plan, some things can go awry. A financial planner will help you identify what could happen and put things in place to provide you with security if they do. This could be steps like ensuring you have an emergency fund.
It may also cover life changes, for instance, what would happen if an accident or illness meant you couldn’t make decisions on your own? A robust financial plan may include naming a Lasting Power of Attorney (LPA) to make decisions on your behalf if you’re unable to.
While it’s hoped you won’t need to use an LPA, having it in place could provide you with long-term security if something happens. Despite this, a survey from Canada Life revealed that 77% of over-55s have not registered an LPA.
6. Create a Retirement Plan That Considers Other Goals
When you retire, creating a stable income to achieve the lifestyle you want will usually be a priority. However, you may have other goals that are important to you too. Perhaps you want to help grandchildren get on the property ladder or ensure you leave behind a legacy for your children. Whatever your goals are, a financial planner can help you understand how to reach them. By making them part of your retirement plan, you’re far more likely to achieve these goals.
7. An Effective Plan Can Provide Peace of Mind
Finally, creating your retirement plan with the support of a professional can provide you with peace of mind. Regular reviews can also mean you feel confident that your plans will remain on track. Knowing that you have someone to ask questions when things change means you can focus on enjoying your retirement.
Are You Ready to Start Planning Your Retirement?
Retirement isn’t a one-time event. It’s an ongoing journey that requires foresight, planning, and regular review. Whether your retirement is imminent or still a few years away, we’re here to help you take the next step with clarity and confidence.
If you’d like to explore how we can help you plan for a secure, fulfilling retirement, please get in touch.
Important disclaimer: This article is for general information only and does not constitute financial advice. The information is aimed at retail clients only. The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. The Financial Conduct Authority does not regulate estate planning, tax planning, or will writing. We recommend that you speak to a qualified financial planner for advice tailored to your individual circumstances and goals.
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