If you are in your 50s and planning to retire in 10 to 15 years then it’s not too late to start saving. Here are our tips for planning retirement in your 50s…
Planning retirement in your 50s
Even if you haven’t saved a penny for retirement there is still time. Working out when you can afford to retire can be daunting however we would advise that you start saving now and be consistent with your investment contribution. Planning retirement in your 50s is possible, it is never too late to start saving, the key is to start.
Retirement planning in your 50s – what to do…
You may be at a point in your life when your earnings are at their peak and you have managed to pay off some of your biggest expenses, like your mortgage.
Bring your pensions together
If you have been saving for retirement then when you reach your fifties you can get your pension pot and retirement plans in sync. For instance, if you have savings in several pensions, which is likely if you have changed jobs during your career, you can bring the pensions together meaning you have one company to deal with for every aspect of your income.
There may be specific restrictions or charges that apply so do check this before you make any alterations. If you are unsure of transferring your pension then we can provide you with advice in this area.
Tax benefits of pensions
You can maximise the tax benefits of pensions by increasing or starting a regular savings plan. Using your carry-forward allowance to make use of any annual allowance that you did not use during the three years is also an option.
What other assets do you have
If you have any other savings such as ISAs, unit trusts or investment accounts there could be tax benefits to moving these into your pension. You should compare the tax benefits in relation to your personal tax circumstance before proceeding though as this won’t be a good option for everyone.
The carry forward allowance
The carry forward allowance can help you when planning retirement in your 50s because it allows you to make use of unused annual allowance from the three previous tax years. This means you are able to contribute more than your annual allowance to your pension pot this tax year (until 5 April 2022) and still benefit from tax relief.
To benefit from this allowance, you must make the maximum tax relievable contribution in the current tax year (typically £40,000) and then use unused annual allowances from the three previous tax years (provided you were a member of a pension scheme), starting with the tax year three years ago.
You can’t receive tax relief on contributions in excess of your earnings in a tax year and you only receive higher rate tax relief to the extent that you have paid it.
Please remember that you are not alone when it comes to making decisions about your financial wellbeing. At Resolve Financial Solutions, we love taking the time to listen to our clients’ retirement plans and helping to make them a reality. We focus on cash flow modelling to give you a clear picture of the retirement lifestyle you can expect. Get in touch today to discuss how we can assist your future plans.
*Please note: A pension is a long-term investment not normally accessible until 55 (57 from 2028). The value of your investment (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available.