Help your clients who are approaching retirement

When your clients have put in place a clear financial plan, they can look forward to giving up work or taking a step back with confidence. As they edge towards their retirement, they may have lots of questions about what happens next. 

There are many issues to consider and it’s important your clients seek professional advice so they make the best decisions in the right order. Here are some of the ways our financial planners can help your clients who are approaching this milestone. 

1. Crunch the numbers 

A good place for your clients to start is to think about the annual income they would likely need so they can fund their retirement dreams and cover any unexpected expenses. A financial planner can help your clients work out how much they might need if they are unsure where to start. They can then analyse their retirement savings to determine whether they can achieve this level of income for many years to come. 

Like any time of life, it’s important to set a budget and our cash flow modelling tools will help. When your clients understand how much they’re likely to spend, they’ll be able to think about how best to use their savings and investments to work out if there’s likely to be a shortfall that needs to be addressed. 

2. Create a tax-efficient withdrawal strategy  

It’s important that your clients draw an income from their retirement savings in the right order so they don’t pay more tax than necessary by considering all the different sources. 

We’ll help your clients understand the tax implications of accessing their savings, including deciding whether to take a guaranteed income through an annuity, or explore more flexible options if available. The rules are complex, which is why it’s important to have a financial planner guiding their decisions so they don’t pay more tax than is necessary. 

3. Decide how best to access their pension savings 

If your client has a defined benefit pension then they’ll receive a set income for the rest of their lives from the eligible date. Defined contribution schemes are more common today, and therefore your client may have several options when it comes to choosing how to use their pension savings to fund their retirement. These can include:  

— Taking some or all their pension as a tax-free lump sum.

— Using their pension to buy an annuity (which will provide a guaranteed regular income for the rest of their life).

— Putting their pension into income drawdown where their pot is invested into a fund or portfolio that lets them take taxable income from the drawdown pot, providing flexibility on withdrawals. 

Your clients may decide to combine two or more of these options. Each has different risks and tax implications, and it’s important they speak to a financial planner before making any decisions.

4. Review their investment strategy 

When your clients are relying on one sum of money to provide an income for the rest of their lives, there are many issues to balance. By continuing to invest, they can seek to grow their retirement savings further to make them last for as long as possible. However, growth is not guaranteed, and a market downturn could have a profound impact on their plans, meaning they may have to cut back or risk running out of money. 

As your clients approach retirement, it’s important for them to review all of their investments and strike the right balance between growth, income and risk. Investing to provide a long-term income comes with a unique set of challenges and needs a distinct approach. Our investment managers have the expertise to provide tailored portfolios to match individual circumstances and needs. 

A new chapter 

For many of us, our working life is a key part of our identity, which can make retiring difficult. To help your clients transition into retirement, you might encourage them to think about how they’re going to spend their time, the sorts of things they would like to get involved with, and how they can maintain a social network.  

When it comes to financial planning, we’re here to support your clients and we pride ourselves on working well with other professional advisers, including lawyers and accountants. Our experience is that this collaborative approach is attractive to both individuals and families of all sizes who are looking for a tailored response to their needs.  

It’s never too early or too late for your clients to start planning for their retirement. Our financial planners and investment managers are here to help your clients design and implement plans that make the most of their golden years – and can also provide ongoing support by reviewing them regularly. If you’d like to find out more about our retirement planning services, please speak to your Rathbones contact or get in touch.