The decisions your clients make at retirement will have long-lasting repercussions and could affect all areas of their lives after work.

For this reason, it is vital that they make the best possible choices.

Seeking professional advice could be a great first step.

At Boolers, we can guide your clients throughout their retirement journey, from pension saving to choosing the “right” option and managing the potential need for later-life care.

Keep reading to find out how Boolers’ experts can provide peace of mind and make a huge difference to your clients’ retirements.

1. Longevity plays a key role in retirement planning

The latest life expectancy data from the Office for National Statistics (ONS) covers 2018 to 2020. It confirms that males aged 65 during this period are expected to live another 18.5 years, while 65-year-old females are estimated to live for another 21 years.

With the minimum retirement age currently set at 55 (rising to 57 in 2028), your clients’ retirement could last 30 years or more.

The ONS report also confirms that the number of people aged 100 increased by 18% between 2019 and 2020, rising to 5,120 people. Your clients might find that their retirement pot needs to last for four decades, while still leaving enough to cover potential later-life care costs and the wealth they intend to pass on.

Increasing longevity plays an important role in every retirement decision, from when your clients retire to the option they choose and the estate planning they undertake.

2. Choosing the “right” pension option isn’t easy

Your clients have many retirement decisions to make and choosing the right option, or a mix of options, for them isn’t easy. Multiple factors will need to be considered, including:

  • When your client chooses to retire and their life expectancy
  • What they plan to do in retirement and the cost of these plans
  • Their non-pension retirement income, like rent from buy-to-let properties.

A traditional annuity (alongside the State Pension) can provide a stable and regular income that makes budgeting for a long retirement easier. This might be perfect for some clients, but it’s important to remember too that retirement expenditure will fluctuate.

We sometimes talk of a “retirement smile” that tracks the costs incurred throughout retirement. The smile begins in the early, active years of retirement when clients might be travelling or taking up new hobbies and costs are high.

Later in retirement, expenses begin to fall as clients settle into life after work and find their level of activity decreases. The smile upturns again in later life when care costs arrive and expenses increase.

This might mean that an annuity (especially on its own) won’t be right for everyone.

Flexible pension options like an uncrystallised funds pension lump sum (UFPLS) or flexi-access drawdown might be a better way to cover the one-off expenses of the early active years, but budgeting becomes a lot harder.

At Boolers, we can help your clients to manage their retirement income and budget tax-efficiently, allowing them to live the lifestyle they choose with peace of mind that they won’t run out of money.

3. Start thinking about later-life care and estate planning early

It’s never too early to start planning an estate or deciding how to cover the cost of later-life care. And your clients’ pensions could play a key role in both.

Unused pension pots fall outside of your clients’ estates for Inheritance Tax purposes. When a pension holder dies before age 75, the whole unused fund can be passed to a chosen beneficiary tax-free. On death after 75, the unused fund passes to a beneficiary who will be taxed at the highest rate they pay.

It is worth noting that a beneficiary is chosen by the pension provider, rather than via a will, and the pension trustees retain the final decision on who receives funds.

Keeping a pension back, untouched, could be a great contingency, especially where there is a degree of non-pension wealth. In this case, a pension could cover the cost of later-life care, or form part of your clients’ tax-efficient estate planning if care isn’t required.

Get in touch

The at-retirement decisions your clients make will affect the rest of their lives so it’s crucial they get these right. At Boolers, our expert financial advice can help.

If you have clients who would benefit from retirement advice please get in touch. Email or call 0116 240 7070.

Please note

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.