5 Considerations for a Happy Retirement

Jessica Amodio
Partner and Independent Financial Adviser at GDA

1. Plan in Advance
   Ideally you should start planning for your retirement as soon as you start working, this gives you the maximum time for building your funds. Using a pension allows you to invest your own money as well as receiving contributions from your employer, and tax relief from the Government. However, if you do start saving into a pension later, the rule of thumb is to take the age that you started saving into a pension and divide it by two. This number (as a percentage) is how much of your pre-tax salary you should into your pension every month.

2. Maximise employer contributions and reliefs
   One of the best features of using a pension to save for retirement is tax relief. When you pay into your pension, some of the money that would have gone to the government as tax goes towards your pension instead. This tax relief is given based on the rate of Income Tax that you pay and here are certain limits that you need to be aware of which can impact the amount of tax relief you're entitled to. It is also well worth joining a workplace pension if it is available to you, not only do you get your tax relief, but also a contribution to your pension from your employer. It requires a minimum total contribution and this is made up of the employer’s contribution, the worker’s contribution and the tax relief.

3. Check what you will have as income once you finish working
   This should be everything you will have available when you retire: pensions, investments, savings, and the state pension. You can claim the state pension when you reach state pension age, and you should check as that date approaches, how much you will get by using the state pension forecast - this means that should you have any gaps in your national insurance contributions, you can plug these and ensure you are getting the maximum pension available to you. You should also take into account how much tax you will be paying on your retirement income.

4. Look at your outgoings now and project your anticipated outgoings in retirement
   You should look at what outgoings you currently have and which of these will continue in retirement, this will enable you to see what income you will need to be drawing from your pensions and other investments. It can also help with any decisions you may have to make in terms of paying off any outstanding liabilites such as mortgages.

5. Remember to look at things jointly.
   If you have a partner or spouse, you might want to look at things jointly. Currently you might have two incomes coming in, but you may need to consider whether you will need to also support your partner if they do not have any retirement savings, which may be for a number of reasons.

This article isn’t personal advice. If you’re not sure whether a course of action is right for you, ask for financial advice.