‘Life planning’ is important for everyone

Retirement saving and pension planning

What do we even mean by ‘pension’? - Credit: Getty Images/iStockphoto

Torbay is a beautiful place to live. If you’re retired and living in the Bay, you’re likely to have more time to enjoy all the area has to offer.

The population of Torbay is around 134,000 and one in four are aged 65 or over. 

As you either plan your future retirement or enjoy being retired already, how can you make your retirement income work best for you?  

During the planning stage, it’s often important to have a picture in your mind’s eye.

Retirement may well bring new opportunities – travel, new hobbies for example – and it’s important that you have funds set aside to allow you to do all those things.

Planning for retirement consists of more than simply putting money away. 

We’re all different, the retirement picture you have in mind will be different from the next person and the next and so on. 

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That’s where the benefit of having an objective view can come in really handy.

Even if you’re pretty confident you’ve taken all the steps you need it’s always worth asking yourself, 'do I need a financial adviser to advise me on my pension?'

Often having some external advice can help fine tune your planning. 

And what do we even mean by ‘pension’?

The word can mean the income you receive while retired and is also used generically to explain your retirement planning.

A pension might consist of savings that comprise equities, bonds and cash but, it might also refer to other assets that produce an income such as property. 

Over 20 per cent of the housing in Torbay is privately rented. Many of the landlords of these properties will be using the rental income to supplement a pension or to help save towards retirement. 

Looking at what’s happened to local property prices over the years, it’s easy to see why this sector looks appealing to investors.

Some people have been able to make a lot of money by riding the market.

But, property, like any financial asset or investment, carries its own risks and potential rewards. 

The perception is that property prices will always increase and it’s an asset that you can touch, feel and understand.

But it’s much more complicated. How do property returns compare with other investments?

What’s the taxation position for property income and capital gains from property against other more tax-friendly savings options? 

Equity release/lifetime mortgages are another option to access cash from your property.

If you don’t want to sell your home, you may still be able to access a large portion of money. 

You can also use apply for a lifetime mortgage when buying a property in retirement. 

Equity release can provide you with a large sum of money to spend whilst enabling you to continue to live in your home.

It can be particularly useful for covering expenses later in life, such as home improvements or long-term care or perhaps to release funds to help other family members.

To be eligible you need to be 55 or over, most products are not based on your income but purely the amount of equity you have in your property.

The advantages and risks of any financial transaction should always be considered.

Equity release gives you money to spend now, rather than leaving it locked away in your home while a downside is that it will reduce the amount of inheritance your beneficiaries could otherwise receive. 

Good mortgage and financial advisers do many different things for many clients. They know how to make the best of an individual’s circumstances.

It will often make sense to take advantage of their experience and advice. 

Sometimes, even an initial chat can throw up some really useful points that may make you say, ‘well, I certainly hadn’t thought of that’.

And that could lead to you feeling happier about your future retirement plans or, if you’ve already retired, help you achieve all the things you’d hoped to do now you’re no longer working.

Mark Rainey, owner of Mr Mortgages in Torbay

Mark Rainey, owner of Mr Mortgages in Torbay - Credit: Mark Rainey