Written By Debbie Packer
On average, women tend to be less proactive into saving for retirement for a variety of reasons, whether that be lack of available funds, not knowing how best to save, having other saving priorities, or not having enough time to plan their pension. It is therefore not surprising that there is a 51% pension gap between males and females in the UK [1].
Although we have come a long way in recent years, it is no secret that there are a lot of improvements still to be made when it comes to wealth inequality. Globally, women are paid 23% less than men [2], and are more likely to take a career gap to care for relatives and children. This is a common scenario we experience with clients and is no different with the Jones’.
At a recent meeting with married couple, John and Helen Jones, we discussed their assets and goals for retirement now that they are in their late 50s. After assessing their ideal lifestyle and expenditure in retirement, we arrived at a total annual income requirement of £60,000.
John had a good understanding of his pension of around £40,000 pa (a combination of final salary and money purchase accrued benefits), however, we needed to find how to achieve the additional £20,000.
In contrast to John’s position, Helen was unsure of what her pension entitlement would be, as she had worked for a variety of employers each with different pension arrangements in place, including a school, a dental practice, and a local law firm. As well as this, Helen had taken a few career breaks when her children were younger, and so she was not confident that her pensions would be worth much, especially in comparison to her husband’s.
We were able to recommend additional funding for Helen, utilising her Carry Forward Allowance from the last 3 years. This has given her pension pot a real boost, as well as the enhanced return by moving away from funds that were managed on a ‘lifestyle’ basis, meaning more was held against low returning cash and fixed interest funds than her actual risk assessment permitted.
The resulting increase, in both funding and investment return, meant she not only understood her situation better but was able to create the size of pension required to achieve the additional income they needed.
It was concluded that her pension would provide an additional £12,000 pa which, although not at the same level as her husband, still helped greatly towards their goal for retirement. We were also able to update the beneficiary nominations of both John and Helen’s pension arrangements, meaning they would each continue to receive an income in the event of either passing away, or their daughters beyond them.
To reach the additional £8,000, we were able to restructure the borrowing on their property to free up some savings they had earmarked for their mortgage payments, and instead invested this to give them the additional funds required at retirement.
John and Helen are now on track to reach their desired income for retirement thanks to the carefully planning in place. By looking at their goals and aligning their current finances correctly, this offered peace of mind and clarity to the couple.
At Integrity365, we encourage all clients to have a clear understanding of what their assets are worth and how we can maximise the opportunities available to them. Taking advice to analyse existing arrangements and then maximise current earnings to fund further, this can make a huge difference to the lifestyle possible in retirement.
Do not underestimate your pension and what it is worth. A small change to your contributions or taking the time to understand what is in each of your pension pots, could help you reach your dream lifestyle in retirement.
If you need any advice or support with your pension or retirement plans, please do not hesitate to get in touch with one of our experienced Independent Financial Advisers today on 0117 450 1300.
The Jones’ Current Assets:
Annual Retirement Income Required:
= £60,000
Income Sources for Retirement After Seeking Financial Advice:
Written By Debbie Packer
