Wealth Management for Retirees

Wealth management for retirees is about coordinating your income, tax and investments in ways that benefit you most.

At Clearwater Financial Planning, we have been assisting people across Devon and Cornwall in managing their assets since 2006. We are commonly asked: ‘What is the best strategy to draw down my assets?’ We can offer guidance on this.

Begin planning according to need

Managing wealth in retirement starts with calculating your essential expenditure. This includes areas such as: 

• Household bills
• Utilities
• Groceries

The next step is to work out spending on non-essential costs, including:

• Holidays
• Eating out 
• Sports and hobbies
• Gifts

Once you have your total, subtract this from any retirement income that is clearly defined. This could be your state pension or other pensions you have invested in.

The gap between your reliable income and spending combined is where your invested assets may need to come in. This gives you a transparent way to view how much you need to withdraw and when, and whether you need to change plans.

Get to grips with pension drawdown investment risk

A drawdown pension allows you to take money from a defined contribution pension pot while the rest of your money remains invested. Although the amount that is invested can increase in value, there is also a risk that you will end up with less.

It is important to consider pension drawdown investment risk in terms of sequence. If your pot decreases in value at the beginning of retirement, continuing to withdraw can have a significant impact on your future finances. If you choose to sell investments after a fall, there will be fewer units that may increase if the market recovers. This can affect the length of time that you can benefit from your portfolio.

For further guidance, MoneyHelper explains pension drawdown risks and withdrawal planning, including how investment performance and withdrawal levels can affect your retirement income.

Tax efficient retirement income

How can you make your retirement income tax efficient? Your ability to do this is dependent on the entirety of your financial landscape. You are usually taxed on pension withdrawals, but income and gains from ISAs are generally areas in which you do not have to pay tax.

Taking money out of taxable investments can have an impact on how much tax you pay through income or capital gains. This means that when you make withdrawals and the order in which these are done can affect your tax bill as a whole. It is important to assess all sources of income as one, rather than looking at each account individually and find out the regulations that are applicable to your circumstances.

Flexibility

Managing your finances during retirement is a process that should evolve over time. What might have been a sound retirement investment strategy at the beginning may change. Get in touch with us at Clearwater Financial Planning to get tailored guidance on protecting and managing the funds and assets you have worked hard to accumulate.