When do you need guidance on your retirement?

Road Warning Sign. Retirement concept.Digitally generated 3d image.

Getting advice on your retirement is undisputedly a good idea but the timing of the guidance is up for debate, as is who should provide it.

In the Budget, chancellor George Osborne set out a plan for a 'guidance guarantee' that means every retiree will get some impartial guidance – not actual independent advice – on their options in retirement.
In reality the guidance is likely to be a whizz through of how long you could live and what will happen if you take all your money out of your pension and spending it all – spoiler, the answers are; a long time and poverty happens.

Of course I'm being blasé about it and actually knowing the basics about how long you have to make your pension last for and what you will and won't be able to buy if you fall back on the state pension is very important.

But when do we tell people these important facts? The idea at the moment is to do it when individuals retire but surely that's too late because if you're at the point of retirement then it's too late to do anything about the fact you may not have saved enough or that you really should have paid down the mortgage before picking up your pipe and slippers.

Plus, retirement is no longer just one moment in time anymore; it is a moveable point. Many people retire part-time through necessity or otherwise, some may retire and go back to work. Some don't retire when they thought they would.

It could be argued that you should start telling people about their retirement options 10 years before they plan to retire, because at least it will give them time to do something, whether saving more or paying down debt, to get a step closer to their ideal retirement. Others may find they can retire earlier.

The other big hurdle to Osborne's plan is who will deliver this guidance? It's going to be paid for by pensions providers but I would argue they're not the best channel to deliver it – something to do with vested interests and a poor track record when it comes to delivering good value and the right products to pensioners.

The guidance guarantee is long overdue, let's now make sure that it's not too little too late or a new way for poor pension products to be mis-sold to unwitting consumers.

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When do you need guidance on your retirement?

If, like many Britons, you have failed to save the cash you need to maintain a comfortable standard of living in retirement, one option is to sell your home and downsize to a smaller property, using the money leftover to cover your living costs.
If moving out of the family home is too much of a wrench, however, the good news is that equity release schemes allow you to stay in your house or flat while still using the equity built up in it to provide some extra cash. The downside of the schemes, which work a bit like mortgages, is that you may not have much left to pass on to any children or other relatives.
But that's a small price to pay for a reasonable standard of living. For more information, try Age UK on 0800 169 6565.

Choosing the right annuity can have a significant impact on your retirement income. And as with most pensions, you automatically have what's called an 'open-market option' (OMO), you can scour the market for the highest annuity rate.
It is worth checking what your pension provider is offering first, though, as some companies offer guaranteed rates for existing customers that are likely to beat those available elsewhere. The Pensions Advisory Service on 0300 123 1047 is a good place to get some free advice.

On retirement, most people convert their pension fund into a guaranteed income annuity that pays out the same amount every month for the rest of their lives.
However, you can also choose an increasing annuity that pays out smaller amounts in the first few years but offers larger payments further down the line. This may prove a wise move if the rate of inflation remains at over 2%.

It is now easier to work later in life because the "default retirement age" has been scrapped.
People approaching retirement age and worrying about money can therefore choose to work for a few years longer - potentially transforming their financial situation. Other than the extra income from working, these people can look forward to higher state pensions, and higher annuity rates due to their greater age.
They can also benefit from bigger tax allowances and the fact that they no longer have to pay National Insurance contributions. Check out this nidirect website for more details.

You could get a much better rate with an impaired-life annuity if you have a medical condition that is likely to reduce your life expectancy.
Incredibly, even snoring, which is a common symptom of Sleep Apnoea could have an impact.
According to figures from MGM Advantage, a man with this condition could receive an extra £12,000 retirement income over the course of their retirement - or £571.44 extra money each year. Click here to find out more.

To maximise your retirement income, it is vital to ensure that you are receiving all the benefits to which you are entitled. These include the basic State Pension, and in some cases, the additional State Pension.
If you are on a low income, you could also qualify for the guaranteed element of Pension Credit, while those with some savings may get the savings element of this benefit. For more information about these and other benefits such as the Winter Fuel Payment, click here.

Many older couples rely on the pension income of one person - often the man. Should that person die first, the other person can therefore be left in a difficult position financially.
One way to prevent financial hardship for the surviving person is to take out a joint life annuity that will continue to pay out up to 67% of the original payments to the surviving partner should one of them die.
The disadvantage of this approach, however, is that the rate you receive will be lower. Again, the Pensions Advisory Service on 0845 601 2923 is a useful first port of call if you are unsure what to do.

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