Retirement planning for doctors
In the UK today, the average life expectancy for a man is 79.3, increasing to 82.9 for a woman (ons.gov.uk). Not a shock to anyone, but what is surprising is the short amount of time given in deciding how you draw your NHS pension benefits and if it really fits in with your retirement goals and aspirations. You may not even be retiring in the traditional sense and will continue to work in some capacity beyond the NHS Pension Normal Retirement Age, using the 24-hour retirement rule to begin payment of your pension without penalty.
Many medical professionals, who simply do not have enough hours in the day, will struggle to commit adequate time to their own personal finances, but retirement is something we all know is drawing closer, so it is imperative that this period of your life is planned for in detail. Afterall, you may need to live with this decision for 25 years or more.
Speaking to financial planner at least 12 months ahead of your Normal Retirement Age gives you time to consider all the key areas including:
- The impact of the annual allowance and lifetime allowance? Are there any tax implications which will impact on your final retirement benefits?
- What you spend now and how will these spending habits change in retirement?
- Do you have any capital events planned – home improvements, new car, house deposits or weddings etc?
- Do you have other capital assets or sources of income that will continue in retirement?
- Have you built up value in a private pension or AVC?
This information can all be used to build a robust financial plan (cashflow model) that will become the focal point throughout your retired years. Do you need to maximise the income available or could you live comfortably with less income which will allow you to draw a higher lump sum? This may not be a simple choice, especially if you have other sources of income or other capital assets that all need to be factored in.
As financial planners, we see rushed decisions all the time. Once the decision is made and your retirement application is submitted it cannot be amended. If you get this wrong, it could result in excess tax being paid in future years, or a lack of capital to pay for all the things you wanted to do in your retirement.
It is not just now that you need advice but throughout your retirement to ensure you continue to achieve you goals and aspirations. Unforeseen events happen and your objectives will probably change as you get older. A good financial plan becomes a bad one if it is not reviewed regularly and tweaked to ensure it continues to reflect your goals and aspirations.
To start your retirement journey contact Tom Bate at Tempus Wealth for a no obligation consultation here
This does not constitute advice and advice should be sought in all instances before acting on it. Tempus Wealth are authorised and regulated by the Financial Conduct Authority.