Today’s blog is going to be short and sweet… but you definitely need to read this, before you pay any more money into your pension!
You probably know I’ve talked about pensions before and the part they play in modern retirement planning, as part of your future planning process. It’s something I do with my clients all the time.
But if you’ve worked with me before – or if you’ve taken part in my PATHWAY program – you’ll know there are certain things that you need to do before you put ANY money into your pension. Whether that’s an existing pension or something new!
So here we go:
#1. Make sure you have more money coming in than going out each month
I know it might sound obvious, but it really is the biggest thing to have in place first.
If you haven’t sorted this, you might end up with loads of money at retirement, but you might also go bust trying to get there.
If you’re not 100% clear on this, take a bit of time to go back through all your income and outgoings over the last year, to see how much surplus income you actually have each month (or what the deficit is that you need to make up).
It’s not always easy to be totally honest with yourself about your financial position but without this information, it’s impossible to start making the right decisions and saving properly for the future.
(I can help with this too by the way, if it’s something you need to work on – maximising your income and your profit, finding savings in what you spend and reducing your tax liability. More on that later!).
#2. Allocate your monthly surplus income wisely!
The next thing to do is to make sure any surplus income you have each month is allocated sensibly.
Now, some of this might be investing for the future, but have you got money on credit cards that need paying off?
What about an emergency fund? Have you got one? If you go off sick from work, or if you need emergency medical treatment and don’t want to wait for the NHS… have you got enough set aside?
These are all things that you need to get bottomed out before you set up that direct debit to put money into your pension!
#3. Work out if you should be putting money into a pension at all…
Should you even be paying into a pension?
Well, it depends on loads of things – like whether you’ve already got pensions and investments in place; how much you’re going to need to live on a retirement; when you want to retire; and whether you’ll keep working part time.
It’s ALL going to affect whether you should put money into a pension.
A pension is just a type of tax wrapper. That tax wrapper goes around an investment.
If, for example, you chose a moderate investment fund, you could hold that in a pension, in an ISA, in an investment account, in an investment bond, and so on and so forth.
Each of these has different advantages and disadvantages. Each of them has different tax treatment and limits to how much money you can pay in, either per year or in total.
For lots of people, paying all your money into a pension doesn’t give you the flexibility you want, because you can’t take money out of a pension before you’re 55 (rising to 57 over the next few years). Also, only 25% of that pension income is tax free – you pay tax on the rest, like any other income.
If you’ve already got a sizable pension – like if you used to work for the NHS or were a teacher and have got a final salary scheme – paying more money into a pension but not be the best option for you.
If you’ve got a big pot of money that you’ve inherited in a pension from a spouse, or that you’ve been putting away for years and years – again, it might not be the best option.
Having a diversified portfolio of assets in a range of tax wrappers will give you more choice, but it can be really hard to work out how to do this. Which is where my PATHWAY program comes in!
So what is PATHWAY?
It’s for 40-something business owners, with little or no pension, who know they really need to sort it out!
Working together over 6 months, we’ll:
- Get clear on how much money you need to live on now, and how much you’ll need in retirement… and then get some systems in place so that you FEEL better about your money
- Get clear on what your dream retirement looks like and then map out the component steps to get you there, building on what you’ve already got in place
- Find additional money now to put towards your retirement goals. You’ll be excited to see what’s possible for YOU… even if you’re starting from zero
- You’ll learn how to reduce your tax bill and free up money that can be used towards your retirement planning in a way that actually makes sense! And gives you the flexibility you need
- I’ll show you how to break the link between what you earn and the sales you make. And then how to use this to re-invest back into your business, without overspending and to get on top of your cashflow…
- We’ll work on boosting your profit too. To boost your quality of life now; boost your retirement pot… or both!
And then once we’re sorted all that, it gets even more exciting!
- We’ll work through your Strategic Wealth Plan. For the first time you’ll know EXACTLY how big your retirement pot needs to be and how to fill the gap!
- We’ll go in depth into the types of investments that can be used to create a modern retirement plan, and how by combining more than one, you could create a TAX-FREE retirement income of £50k a year or more…
- And I’ll show you how to ELIMINATE your personal tax bill within 6 years, by structuring your portfolio to maximise the tax allowances we all have. Freeing up even more money to be invested for your future!
You’ll leave with a simple-to-follow plan – with you understanding exactly what you need to do to meet your retirement goals PLUS the knowledge that the money will last your lifetime and beyond. You’ll have financial confidence and peace of mind. No more stress or worry about all your money stuff… but fully understanding how to build your wealth on autopilot instead!
Sound good?!
Just CLICK HERE to get all the details now.
If you’ve got any questions or want to chat it through, just click the Whatsapp link button at the bottom of the page to message me directly!
Until next time,
Claire