Why Retirement Planning Matters
Retirement is one of life’s biggest financial milestones, yet many people put off planning for it until it’s almost too late. The truth is, the earlier you start, the more control you’ll have over your future income and lifestyle.
A structured retirement plan gives you peace of mind – knowing you’ll have enough to live comfortably, cover unexpected expenses, and enjoy the freedom you’ve worked hard for. At Ward Goodman, we help clients across Dorset and the wider UK take practical steps to build a secure and sustainable retirement plan.
Understanding Different Pension Vehicles
Q: What types of pensions are available in the UK?
A: The three main types of pension are workplace pensions, personal pensions, and Self-Invested Personal Pensions (SIPPs).
Each offers different levels of flexibility, contribution options, and tax advantages:
- Workplace Pensions: Contributions are automatically deducted from your salary and often matched by your employer, making them an efficient way to save consistently.
- Personal Pensions: Suitable for the self-employed or those looking to supplement workplace schemes. You can choose your own provider and investment strategy.
- SIPPs (Self-Invested Personal Pensions): Offer the highest level of control, allowing you to select your own investments and consolidate multiple pension pots.
Understanding how each type fits into your long-term goals is the foundation of effective retirement planning.
Access Points and Timing
Q: When can I start accessing my pension?
A: You can usually access your pension from age 55 (rising to 57 in April 2028). However, timing is everything – withdrawing too early can impact your tax position and long-term income potential.
Your retirement timeline should balance accessibility, tax efficiency, and sustainability. Consider:
- State Pension: Available from your state pension age (currently 66–68 depending on birth year). It provides a baseline income but rarely covers all expenses.
- Defined Contribution Pensions: You can take 25% tax-free and draw the remainder as income, lump sums, or annuities.
- Defined Benefit Pensions: Offer guaranteed income for life, often linked to final salary – but with less flexibility.
Income Options for Retirement
Q: What are the main ways to take income from your pension?
A: There are three primary options: drawdown, annuities, and lump sums. Each has its benefits and trade-offs.
| Income Option | Description | Ideal For |
|---|---|---|
| Drawdown | Keep your pension invested while withdrawing income as needed. Flexible but subject to market risk. | Those wanting control and potential for growth. |
| Annuity | Exchange part or all of your pension for a guaranteed lifetime income. | Those seeking financial certainty. |
| Lump Sum | Take money out in portions or as a one-off withdrawal (25% tax-free). | Those needing flexibility or larger upfront access. |
Many retirees use a blended strategy – combining drawdown flexibility with annuity stability.
Forecasting Your Income Needs
Q: How much do I actually need to retire comfortably?
A: Everyone’s ideal retirement lifestyle is different, but the Pensions and Lifetime Savings Association (PLSA) suggests annual income targets of around £31,000 for a moderate lifestyle and £43,000–£59,000 for a comfortable one.
To plan effectively:
- Estimate your annual living costs, including essentials, travel, and leisure.
- Factor in inflation – the value of money changes over time.
- Consider long-term care needs – healthcare costs can rise significantly later in life.
We use detailed forecasting tools to help clients map out spending patterns and adjust for life’s changes.
SIPPs: The Flexible ‘Pot for Life’
Q: Why are SIPPs so popular among retirement planners?
A: SIPPs allow you to manage your own investments, consolidate multiple pensions, and maintain flexibility over withdrawals.
Benefits of SIPPs include:
- Control: Choose where and how your pension is invested.
- Consolidation: Combine various old pension pots for simpler management.
- Tax Efficiency: Contributions attract tax relief, and 25% of withdrawals are tax-free.
- Inheritance Benefits: Remaining funds can often be passed to beneficiaries tax-free if you die before age 75.
They’re ideal for those who want more autonomy over their pension strategy.
Avoiding Common Retirement Planning Pitfalls
Q: What are the biggest mistakes people make when planning their retirement?
A: Some of the most common pitfalls include:
- Underestimating living costs: Lifestyle expenses often increase, not decrease, in retirement.
- Delaying contributions: Starting late means missing out on valuable compounding growth.
- Relying solely on default pension funds: These may not suit your goals or risk profile.
- Withdrawing too aggressively: Overdrawing can deplete funds faster than expected.
- Ignoring professional advice: Expert guidance ensures you maximise tax efficiency and avoid costly missteps.
Why Choose Ward Goodman
With over 40 years of financial expertise, Ward Goodman provides holistic retirement and pension advice to clients across Dorset and throughout the UK. We focus on balancing security with flexibility, helping you enjoy your retirement with confidence.
Our tailored approach ensures your pension strategy evolves alongside your goals, lifestyle, and family circumstances – from your working years to your legacy planning.
Ready to Take the Next Step?
Visit our dedicated Pension & Retirement Planning page to learn more, or contact our team to schedule a review and start planning your future today.
