The government recently confirmed changes to the age at which individuals can access their personal pension pots. From 2028, the age at which people can access their pensions will rise from 55 to 57. So if you need to, how can you adapt to the changes?
Sometimes we must all adapt to changing circumstances. Those currently under 47 will have to wait two years longer before they can access their pensions. The changes are designed to align with keeping this pension freedom age 10 years below the state pension age, which increases to 67 in 2028.
But the outcome needn’t be glum. Being affected by the change may present you with a good opportunity to review your retirement plans. This could help you to be better off in retirement if your review highlights any shortfall in your long-term planning or if there is simply something you have overlooked, like the disruptive effects of inflation.
Assessing your circumstances
Whether your planned retirement date changes or not you should assess whether you are saving enough into your pension now to support your retirement goals. Because many of us are typically living for longer, you should consider how you can pay for those extra years.
For example, it’s worth evaluating your assets and income on one hand versus your liabilities and expenditure to get a realistic assessment of your financial potential. You can take other steps, too, to ensure you don’t simply retire, but retire comfortably.
While it is worth considering whether other aspects of your financial plans should change, it may also help to familiarise yourself with common retirement mistakes to ensure you avoid obstacles which could trip you up.
The benefits of enhanced flexibility
For many, retirement no longer occurs at a single point in time, and instead can involve a reduced working life accompanied by drawing on retirement savings to pursue other life aspirations. This flexibility is a hallmark of an era where freedom is increasingly valued.
Similarly, funding retirement is not just about pensions. While the new age-related access legislation applies specifically to pensions, it doesn’t impact other accounts you may have, such as a general investment account or an ISA. These may also be used as a part of a retirement plan, giving you enhanced flexibility and ease of access.
To see how your pension could grow over time and how to manage your future income withdrawal needs, our online projection tools can make a big difference to understanding your financial potential.
The extra two years until you can draw from your pension may be a welcome catalyst for change, giving you extra time to review and optimise your situation. Yet you don’t have to figure out the complexities of retiring well without support. If you would like to discuss your plans, please get in touch with one of our financial advisers.
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