Pensioners urged to ‘always start’ with key document to get most out of state pension

Retirement expert advises people to learn about state pensions

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Retirement can be costly, and many will want to have their affairs in order before leaving the workforce. Some will have more time to do so as the state pension age is rising, alongside the age at which private pensions can be accessed. spoke exclusively to Andrew Tully, technical director at Canada Life, who offered further insight.

Mr Tully pointed towards a key document which he said provides a good starting point for retirement planning.

He said: “Always start with a state pension forecast as that is the foundation of most peoples’ retirement income.”

The state pension forecast can be applied for online, as the service outlines how much a person could get and when.

But it can also be requested from the Future Pension Centre, or by filling in the BR19 application form and sending it by post.

However, the state pension is not the only aspect of retirement planning, and one’s personal pension is also important to consider.

Mr Tully continued: “The earliest you can access your private pension is currently age 55. That doesn’t necessarily mean you should, especially if you have plans to keep on working. 

“You are able to take the first 25 percent of your pension tax-free, with any further withdrawals taxed at your rate of income tax.

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“There is a ‘10-year link’ between state pension age and ‘pension age’ which means the minimum age at which you can access your private pension will go up to age 57 in 2028.”

As a consequence, people may wish to start thinking about how to budget for their retirement.

Individuals will need to look at how long their pension income will last, as well as their attitude to risk.

Mr Tully added: “A man aged 65 today is likely to live until age 85 on average. A women aged 65 today is likely to live until age 87. 

“These are only averages and your own health and lifestyle, even where you live, will have a big impact on these numbers.”

While the state pension is a safety net, other elements of saving are key, and this is why it is vital to make savings and pensions last the course.

However, it is also important to find a balance and enjoy retirement without worrying about cash.

Not only is it important to think about later life, but also what happens when a person dies – importantly, what they will leave behind.

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As a result, Mr Tully encouraged Britons to make a Will, keeping this document up to date if there are any changes in personal circumstances.

He said: “You may also want to put in place ‘Lasting Powers of Attorney’ which can provide peace of mind if your partner or family member loses mental capacity to make decisions around finances or health. 

“These can be completed very cost effectively and directly through the Office of the Public Guardian with the forms available online.”

Finally, financially planning for retirement is undoubtedly going to present major decisions, and even challenges to overcome.

Mr Tully told Britons their tax implications are likely to come into play, especially if people are planning for a long-term future.

For this reason, individuals may wish to seek regulated financial advice in order to keep their dreams and plans on track.

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