Advice & guidance
With more options now than ever before over how and when to finance your retirement, most people will have more than a few questions that need answering.
So if you're one of those feeling confused and left wondering who you can approach for advice and guidance about retirement, then relax! We look at why advice and guidance is important and how to get started.
Why do I need advice or guidance about retirement?
You may be very clear about what you'd like to happen and how you're going to secure a comfortable retirement financially, but the fact of the matter is that decisions you make now could affect you for the rest of your life.
What's more, you may not be up to speed with the latest changes in pension rules and regulations. Pensions, annuities and long term financial planning are complicated subjects, so any information that helps you make an informed decision is a good thing.
Where can I get advice or guidance?
The government has introduced a free service called Pension Wise that can help you decide what to do. The service won't tell you what's right for you, but it will explain the options that you have available and provide you with information about aspects of your finances. You can access the service online, talk to someone over the phone, or meet face to face.
Using the Pension Wise service will enable you to think through key issues such as:
- Understanding how you might be affected if you continue working, if you change your personal circumstances and if you wish to leave money after you die
- Understand the different options for accessing your pension pots and the potential advantages and disadvantages of each
- Understand the tax implications of your choice
The Pension Wise service is free and impartial, it is provided by The Money & Pensions Service (MaPS). They will not recommend companies or tell you how to use your pension pot or invest your money. If you require someone to help you make these sort of choices then you might be better off seeking financial advice.
Where can I get financial advice?
For a start you may have access to financial advice through your workplace – it's worth checking to find out if that's the case. But if not, then an independent financial adviser is an excellent choice, as you'll be sure of getting an impartial view on your finances.
You can always find an independent financial adviser in your area on thepfs.org or unbiased.co.uk – websites devoted to listing details of advisers, both restricted and independent.
Some advisers offer a "restricted" or even "simplified" advice service which may be appropriate depending on how complex you feel your financial needs are, however, bear in mind you'll only get information about a limited range of products or product providers for these services. Don't worry, the adviser should clearly explain which service he or she offers, and how much they will charge for their services.
How much does financial advice cost?
Plumbers don't fix taps for free. Realistically, it may cost you a few hundred pounds to get in-depth independent advice on products and services that help to look after you, financially, for the rest of your life. But the probability is that really good, sound advice will not only save you money in the long run, it could actually help you make wise decisions that give you a more secure income. Ideally, you should plan to review your situation on a regular basis.
However, if you're a member of a Defined Contribution pension scheme it's worth remembering the new 'Pension Advice Allowance’ which the UK introduced in April 2017 as a more tax efficient way for people to pay for financial advice.
This means that members of Defined Contribution pension schemes could withdraw £500 up to three times from their scheme, and use it to pay for financial advice. And best of all, it's tax free! As it’s a tax free dip into your pension pot, it will reduce the worry of forking out of your pay packet for valuable advice.
What can I do if I don’t want to pay for advice?
Full financial advice comes at a cost as it requires a great deal of training and expertise to become a professional financial adviser.
If you cannot afford to pay for advice (even though it can prove to be a prudent decision for many), you can access the government's Pension Wise service. You can also get advice from not-for-profit groups such as The Pensions Advisory Service (TPAS) or the Citizens Advice, acting on behalf of the Government.