Money saving: How you can make your state pension, savings & personal pension work for you | Personal Finance | Finance


Money saving habits can change across a person’s life, but with retirement there will be a myriad of costs to consider. Indeed, with the removal of a constant stream of income from a salary in many cases, Britons will have to rely upon their own savings actions to get by in later life. Bearing this in mind, spoke to Clare Julian, Wealth Planner at JM Finn, who provided insight into saving for later life. 

No longer are people working for the same employer for their whole working life, or retiring all at once on a final salary pension.

Instead, Britons are shifting towards flexibility, potentially scaling back their work to go part-time, or turning a hobby into a career.

But people are also living significantly longer, meaning the money they have will have to stretch far longer than it would have several decades ago.

She added: “People are continuing to work for many years longer, supplemented by other sources.

“Perhaps, the state pension, as well as savings, pension, rental and investment income.”

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As attitudes change, though, so too do the options which are available to Britons when it comes to financial planning.

Nowhere is this made more clear than through the different pension choices individuals have at their disposal.

Ms Julian continued: “When George Osbourne delivered his Budget speech in 2015, he announced that nobody need have to buy an annuity.

“We now have the option to be able to draw upon our define contribution pension income very flexibly, and this suits people who are choosing to work longer but less regularly.

“The undrawn funds can remain invested within the pension, benefiting from the tax efficiencies that a pension provides, no income tax or capital gains tax is due while the funds remain within the pension wrapper.

“Annuities do continue to have their place, but they are not right for all, and indeed rates are in large part very poor value for money at present.

“Conversely, flexible access might not suit everyone either.”

But aside from the more obvious benefits of flexibility in pension planning, Ms Julian highlighted retirement planning can also have synergy with other forms of thinking ahead.

Many Britons will have to take into account long term care costs, which may be somewhat sobering, but necessary for covering eventualities.

In a similar sense, estate planning ensures those who are left behind after a person’s death pay as little tax as is legally possible.

It may also help beneficiaries to inherit with fewer administrative burdens which can arise when dealing with an estate.

Ms Julian concluded by urging Britons to take a measured approach when it comes to planning for later life.

Garnering as much information as possible, she said, is likely to help individuals make an appropriate decision.

She said: “Finally, there are myriad solutions to all of the above topics a person might face in their latter years.

“Each solution has its pros and cons, and some solutions will be more appropriate for some rather than others.

“The best guidance I can give generally, is to speak to a professional, a wealth planner and/or a solicitor, who can help break down what is most suitable for your based on your own individual circumstances.

“The earlier in life one can begin to devise a plan for those later years, the better equipped you will be for later in life, should any of these topics be relevant.”

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