Retirement is a well-earned and significant milestone. And it should be a time to look forward to – a chance to do more of what makes you happy. We look at how taking retirement planning advice can help you make the most of your money – and feel optimistic about your future.

Retirement isn’t as simple as it once was. Nowadays, there’s much more flexibility when it comes to taking money from your pension savings. And, while that gives you lots of choices, it can also raise questions. With important decisions to make, options to understand and questions to answer, planning your retirement can feel quite overwhelming – particularly at the moment with the rising cost of living having a significant impact on many people’s financial plans.

That’s where retirement advice can be so valuable. A financial adviser can help make the big decisions easier by explaining all of your options and giving you the confidence that you’re making the right choices in the best and most tax-efficient way for you.

Worryingly though, according to our research, fewer than one in five retirees have actually taken professional advice. They mention a wide range of sources to help shape their retirement plans – from friends and partners to their employers. But few are benefiting from speaking to a professional.< />1

Here are some of the key questions an adviser can help you answer

1. When can I retire?

With food and fuel prices reaching an all-time high in the UK, the rising cost of living is without doubt having an impact on many people’s financial plans. If you’re approaching retirement, it’s normal to be a little apprehensive about rising inflation, interest rates and the effect the cost-of-living crisis might have on your lifestyle in retirement.

That’s where an adviser can help. They can help you find a realistic retirement date based on your total income and outgoings. Once you’ve added up all of your potential sources of income – not just your pension savings – you might find that you can retire earlier than you think, or that you can reduce your working hours and retire gradually.

Even if you don’t plan to retire right away, an adviser can help you understand when you can afford to do so.

2. How much income could I have each year in retirement?

An adviser will look carefully at all your sources of income to determine how much you’ll be able to take each year while aiming to make sure you still have enough to last as long as you need it to.

Sources of income can include pensions, your state pension entitlement, as well as any savings or investments such as Individual Savings Accounts (ISAs) you have. And if you have rental income coming in from a buy-to-let property, they’ll take that into account too, along with any equity in your home that you’re prepared to release, either through downsizing or equity release.

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3. Can I still afford my lifestyle?

You might think retirement is a time when you need to cut back on things like buying new cars or putting in that new kitchen. But that’s not always the case. By looking carefully at all your sources of income, your adviser can create a plan that makes sure you have enough money to cover the basics but also allows for some of life’s luxuries.

4. How can I make my retirement income last?

Your retirement income may need to last you 30 to 40 years, or even more. And with inflation at a 40-year high, it’s more important than ever to make sure your money is working as hard as possible for you.

By keeping some of your money invested in retirement, you’ll be giving it the potential to continue to grow in value and beat inflation. An adviser can help make sure that your money is invested the right way, and that your investments remain on track and in line with your retirement plans.

Remember that the value of all investments can go down as well as up, and you may get back less than you paid in.

5. How much tax should I be paying?

Paying too much tax in retirement is an easy trap to fall into. For example, by taking more out of your pension savings than you need, you may end up paying more tax than you have to. A financial adviser can help make sure that you take your retirement income in the most tax-efficient way possible.

Remember though that tax and legislation may change, and your own individual circumstances, including where you live in the UK, will have an impact on your tax treatment.

Financial advice is accessible and affordable

Nowadays, financial advice is very accessible and affordable. You can even get advice from the comfort of your own home, with many providers now offering online and phone support at a time that suits you.

While there’s generally a charge for advice services, this could pay for itself in the long run by way of improved returns on your money, tax savings and, importantly, peace of mind. A study by the International Longevity Centre found that people who take advice are, on average, £47,000 better off in retirement than people who don’t.2

Find out how abrdn's financial planning services could help with your retirement planning.

“After speaking to a professional adviser at abrdn we were able to check what was possible with our finances… It turned out we did have enough to retire – and even had some money left to upgrade our caravan! One year into retirement and we haven’t looked back since – with plenty of trips planned in 2022.”

With the right advice and plans in place, you too could make much more of your retirement income, and get the peace of mind to properly enjoy your retirement.

1. Source: Class of 2022 retirement report

2. Source: International Longevity Centre, November 2020

The information in this article should not be regarded as financial advice. Information is based on our understanding in August 2022