Can you afford to retire?

Working out when you can afford to retire is like putting together the pieces of a complex jigsaw. 

First you need to find out how much is in your various pension pots, such as workplace or private pensions, and an estimate of your state pension. 

You can then calculate if there’s enough to provide you with a sufficient amount of cash for a comfortable retirement – and it’s by no means a given in this day and age. 

Changes to the state pension and how you can access your retirement savings have significantly altered the pensions landscape in recent years. 

Ahead of our People Don’t Grow Old Like They Used To event on Friday, 16 February 2018, here’s a snippet of what you need to know. 

What do pension freedoms mean to you?

Pension freedoms were introduced in April 2015 and allow anyone over 55 to take their entire pension pot as a lump sum, with the first 25% tax-free and the rest taxed as if it were income. 

Statistics from HMRC show 198,000 savers used the freedoms to access their pension early in 2017 – up 20% on the same time 12 months earlier, so the method is proving popular. 

However, various tax rules apply if you want to access your pension early and we recommend that you seek professional advice before opting to do so. 

What is happening with the state pension?

The rules around the state pension are complicated after radical changes were introduced in April 2016. 

When you receive your state pension will depend on when you were born and your gender, while the amount you get is based on how many years of national insurance contributions (NICs) you’ve made.

Under the new rules you need at least 10 qualifying years of NICs to make a claim, but you must make NICs for 35 years to obtain the full state pension (£159.55 a week in 2017/18, rising to £164.35 in 2018/19). 

Those who reached their state pension age before 6 April 2016 will qualify under the old rules, while those who reach their retirement age after this date qualify for the new state pension. 

How to retire in the 21st century

Whether you’re a contractor or sole trader, everyone’s circumstances are different in terms of when they can retire. 

With that in mind, Rod Albright, a pensions specialist at Clifton-based Octagon Consultancy, is our guest speaker at our People Don’t Grow Old Like They Used To event on Friday, 16 February 2018 (12.30pm start). 

Places are limited so if you would like to attend this free event and find out how you can retire in the 21st century, don’t hesitate to get in touch with us today to book your place. 

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