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Six Tips When You Are 5 Years Away From Retirement

Imagine waiting all year to see your favourite band perform live. You queue all day to get to the ticket booth and with front row tickets laid out in the kiosk in front of you, you reach inside your wallet to find out you don’t have enough money.

Of course you may think that would never happen. No one would reach that point before realising they don’t have enough money. It may not happen with tickets, but it does happen with pensions.

Some people reach their chosen retirement date and are shocked that their pension savings won’t provide them with the income that they need in order to stop working. They simply haven’t grasped the fact that their pension needs to be managed, reviewed and contribution levels adjusted over the years.

At Sanlam, we believe that financial planning is all about ensuring you reach each stage in life financially prepared. If you are five years away from retirement, then our top six tips may help you to get the most out of what you have saved.

  1. If you have had several jobs over the years then it is likely that you have a number of pension pots in a variety of places. Find the paperwork for each pension and take the time to go back through your career history to check that you are not missing any. This is particularly important if you have moved house and not updated your address with pension providers.
  2. If you have pensions which are many years old, then they may have not been reviewed for some time if ever. Some old pension schemes will have a much higher charging structure than current plans, it may be that money is being invested into funds which don’t suit your attitude to risk or are invested poorly. It is a good idea to speak to a Wealth Planner to get a good overview of just how and where your money is being invested and whether reducing charges at this stage will be beneficial.
  3. Get a total pension fund value and a projected income of your combined pensions. If the projected income at retirement is much lower than you expected, then ask your Wealth Planner to calculate how much more you need to start saving each month to reach your target and start saving now.
  4. Whilst these next few years are important for adding to your pension savings, it is also important to make sure that you don’t lose what you have already saved; over a longer timeframe, investments can ride out some of the ups and downs in the stock market and start to recover any losses, but a significant loss at this stage would be difficult to make up. Make sure you know how the money is invested and how much risk you can afford to take with your savings.
  5. Consider merging pension pots. This may not be suitable for everyone due to charges or penalties which may apply on certain pension contracts, but if you have lots of small pension funds, it could be that your Wealth Planner recommends merging these into one contract which will be easier for you to manage. Just make sure you are not losing any valuable benefits by doing so.
  6. Take advice. If you do not feel confident about analysing your current pension arrangements or making decisions then speak to a Wealth Planner. They will be happy to provide you with a pension review service and enable you to make informed decisions about your money based on your whole financial circumstances and in line with your attitude to risk.

If you are approaching retirement and would like to speak to a Wealth Planner about reviewing your pension savings or your options at retirement, please get in touch, we’d love to hear from you.

Date Issued:  29.07.15

Please remember any views or facts expressed above are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness. Any expressions of opinion are subject to change without notice. None of the information should be regarded as advice. Past performance is not a reliable indicator of future results. Investing involves risk and the value of investments and the income from them may fall as well as rise and is not guaranteed. Investors may not get back the original amount invested. Any tax treatment is dependant upon individual client circumstances and may be subject to change.

Sanlam is a trading name of Sanlam Wealth Planning UK Limited (Reg. in England 3879955) and English Mutual Limited (Reg. in England 6685913). English Mutual Limited is an appointed representative of Sanlam Wealth Planning UK Limited which is authorised and regulated by the Financial Conduct Authority.

Registered Office: St. Bartholomew’s House, Lewins Mead, Bristol, BS1 2NH.

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.