Retirement can be a time to indulge yourself if you plan it well in advance.
Travel to a dream destination; learn a skill that you always wanted to or fulfil other wishes that you never got time to attend to.
However, you still have one important decision to make. In fact, it may well be the single most crucial decision that you will make for the rest of your life.
What should you do with your pension pot that you have accumulated after years of working hard and making sacrifices?
Decisions regarding retirement income were always a complex one. It has become all the more complex after the new pension freedom rules came into effect in April 2015.
If you are at that juncture in life and are unsure about which way to go, then it’s time to seek professional financial advice.
Why you must get help
You will have to decide how you are going to use your pension pot. And there are a lot of different options. Some are simple, others are complex. But not all of them will suit your financial circumstances and your attitude to risk.
To add to this, there are many questions which you need to answer to be able to make the right decision.
Do you know what questions to ask?
Further, do you know what option to choose if you get the answers to these questions?
- There are more options than ever. You can take larger sums in cash or choose to invest outside the pension. Some of these choices may be risky if you are not too careful with it.
- If you are not aware of all your options, you may well buy a poor value annuity which may leave you with a much lower income than what you are eligible for.
- If you choose to leave your money as cash, you may receive dismal interest rates and may not maximize its complete potential
- There are a large number of fraudsters who are out to make a quick buck via Pension scams. Most of them will try to take advantage of the ‘Knowledge-Gap’ that people have about the radical changes to the pension rules.
These are, of course, just some of the reasons why you must seek professional help. The most important reason is that you must be able to receive an income during your retirement years that will provide you with the kind of lifestyle that you wish for.
Free Professional Advice
The government now provides free financial guidance for retirees through the Pension Wise service. It is run by professional financial experts and volunteers who have considerable expertise and skill handling complex issues pertaining to pensions.
There are multiple ways to reach Pension Wise.
- You can schedule a face-to-face appointment with them by calling on 0300 123 1047.
- You can log on to their website and use their web chat function to speak to a financial expert
- You can also call them on the above number and schedule a telephonic guidance session
While the pension wise service can be used as a good starting point that will be informative, it cannot be considered enough.
Read our post on Understanding Pension Wise.
Professional Financial Advice
A professional financial advice will be a paid service. Advisers are bound by a code to reveal to you beforehand what the service will cost and what advice will be covered.
According to the Association of Professional Financial Advisers (APFA), the average cost of professional advice will be around £150 an hour.
Is this cost justified or are you better off buying what your pension provider is offering you?
Think about it this way. If you spend this money now, you will receive sound professional advice that is tailored to meet your financial objectives and to match your personal circumstances.
Also, the financial advisor will ensure that they will clarify the pros and cons of each option that you have.
The ideal time to speak to a financial advisor is at least six months before you retire.
Are you looking for a professional financial advisor? Read our article, ‘How to Select a Financial Advisor’ for more information.