Retirement… how do I do it?

That’s a question that everyone should be asking, but a lot aren’t unfortunately. So, I’m here to not only answer it but get people asking it in the first place.

Firstly, thank you for taking the time to read this article. I genuinely believe it will help people like you be a little more confident when it comes to retirement planning. The time taken to read will hopefully, save you a lot of money and stress in the long run.

DISCLAIMER; if you have more than £50,000 in assets that aren’t your home, then read this. Then, and this is serious, go find a Financial Adviser because you definitely need one.

This advisor doesn’t have to be me, although I’d love to have you on board. Find one with some integrity and get them to help you, they will add much more value than they cost, I PROMISE!

Another DISCLAIMER, nothing in this set of articles should be considered advice. Although I am a qualified financial adviser and I’m also authorised and regulated by the UK finance regulator - The Financial Conduct Authority to give advice, this is not me giving you specific advice for your specific set of needs. Everything contained in these articles are for information purposes only and has been designed to be able to inform the masses. For me to be able to fully advise anyone, much more detail is required on my behalf to be able to give personalised advice.

So, about me

At the time of writing these articles I’m a 29-year-old financial planner stuck in doors on lockdown due to Covid-19.

I’m based in the sunny (ish) seaside town of Broadstairs, Kent where I was born and raised.

What I’ve learnt in my time in the industry and working with my clients is that, there simply is not enough information out there for people when it comes to retirement, how pensions work and how to react when nearing this stage of your life. There is also a mis-conception that only the wealthy need financial advice. That is simply not true!

To be able to write this I’m getting up early in the morning and working on it before work. I do this because I genuinely want to ensure that everyone is armed with the information to allow them to make better retirement and indeed life choices, whether they can afford an adviser or not. I want to prepare people for what can be a very confusing and disruptive time in life.

It’s a sorry fact that most advisers are too busy with their own retirement to worry about anyone else’s. The average age of an adviser in the UK is now 58 meaning they aren’t as bothered about new clients or younger clients. There is also something in the industry called the ‘advice gap’. This is the gap between people who can afford advice and those that can’t. Unfortunately the advice gap is getting larger and larger, this is at least in part because as mentioned above, my peers (other advisors) are gradually retiring and that is only going to increase. Which means that those advisers who are taking on clients, can be much more selective about who they take on. Potentially imposing restrictions on the amount of money prospective clients must have before they can become a client. This then stretches the advice gap further.

We as a firm don’t believe in a working practice like that. We will work with anyone that we get on with, that's the only test you need to pass.

My company, Financial Escape Ltd has been founded and run by my father, Phil Castle, since 2004. In 2016 I followed in his footsteps somewhat and became a financial planner myself. We now run the business together.

As a firm we advise on all retail investments products, but the bulk of our business is retirement planning and pensions. This specialism has in my opinion, allowed me to write these articles with a decent level of conviction.

Our clients are predominantly small to mid wealth, they range from having £6,000 in a singular pension to millions of pounds in a range of different investments.

Introduction to the articles

Why write this as articles? Well there’s three reasons.

1. I’m always being asked what I actually do as a financial adviser. This leads me to believe that there is a lack of understanding of what we do. I want to be able to see that people understand what financial planning is and also allow them to be prepared for scams who try to prey on their lack of knowledge.

2. I feel like people are going into retirement ill prepared and uninformed. They are then making mistakes all over the place. We all know that prevention is better than cure and in monetary form, it’s more expensive to try and rectify a mistake. I want to ensure that you have an option or a guide during retirement.

3. I initially wrote these articles as a book. For me that would then mean I need to charge you for them for you to then be able to read this information. As I'm not looking for financial gain from this, that option kind of shoots itself in the foot. Therefore, writing it as 6 or 7 articles on Social Media and publishing it for free makes it easy for you to access at your convenience, and its FREE.

Financial advice in the UK

It’s difficult to explain financial advice and what I do because it is so broad and rather complicated. Yet there are parts that are very simple and, in this set of articles I’m going to try and break those down to allow everyone that wishes to be able to DIY Retirement the ability to do so.

Yes, these articles are focused on retirement, but a lot of the other areas we are involved in I will be covered by their correlation to retirement. As I said, I specialise in retirement planning and after all, stick to what you know!

What I want for you is simple. I want you to: understand why it is so crucial to engage an adviser for your retirement planning, but also allow you to gain the basic understanding of pensions so that even if you don’t go to an adviser, you might not fall for any scams or pitfalls in the UK tax system.

So a quick outline of financial advice, this is talking specifically about independent advice but the differences between tied and independent are just on what products we can recommended.

According to Wikipedia – “Independent financial advisers (IFAs) are professionals who offer independent advice on financial matters to their clients and recommend suitable financial products”. Not very helpful right, it's also Wikipedia so it's not ideal.

I see my job as an adviser more as - I need to know about every area in the financial services including the stock market, investments, tax and law. We are the General Practitioner (GP) of your finances and not the specialist. I anticipate that I know my clients finances better than they do and I also know them better than the other professionals who aid them, like accountants, solicitors and fund managers. This allows me to bring together all the different parts of your finances ensuring that everything and everyone is working together towards your mutual goal.

By knowing my clients finances well enough, I can then recommend products, services and solutions which will allow them to live their life. A life that’s worry free from finance, knowing I’m protecting and growing their money. Kind of like escaping from finances in a responsible way.

As I’ve mentioned - I specialise in pensions. That means the regular review of suitability of assets inside pensions, withdrawal type/ rate and the cash flow of them. Essentially making sure my client’s potential income in retirement is aligned with their demands and needs of their expenditure.

In short what an adviser does for you is: they do what you could do yourself, better and more efficiently. You pay for our expertise, experience, research but also for us to recommend the right thing at the right time, meaning you no longer have the risk of doing the wrong thing, or indeed the right thing but at the wrong time.

So, how do I do retirement myself without an adviser?

Firstly if you fail to prepare for retirement you may as well prepare yourself to never retire.

Pensions are complicated and George Osborne did not simplify them in 2015! He did the complete opposite in fact. This means my recommendation would always be find an adviser who suits your thinking and get them to help you. If you really don’t want to do that these articles will definitely help you to manage them yourself. For convenience each article will cover a different segment:

·        How to calculate how much money you need - the formulae you can use when calculating how much money you need as capital to sustain your expenditure in retirement

·       The UK TAX System - a brief overview of how tax is calculated

·        Pre-retirement - tips and tricks to use before you get to retirement

·        Overall - Tips for anytime in your life whether you are retired or beforehand

·        The changeover - including how to turn your pension taps on, why and the different methods of drawing an income from pensions.

·        In retirement. - how to act while retired, things to be aware of and also watch out for.

I would suggest you read all the articles, even if you are already in retirement. Some of the tips and tricks pre-retirement may come in handy for your overall financial planning and general well-being.

Before I end, I want to highlight an area I feel very strongly about – Retirement isn’t just financial it’s very much a change in mindset. Going from earning income to pay for your daily living, to taking money from savings to pay for it is a huge change. Then having to put your trust in both your pension provider and your own assumptions of your expenditure in later life, this is difficult for the best of us.

Something to reiterate that is - life is a process and retirement is a major part of that process (at least 30% of a lifetime or 3-4 decades). It doesn’t necessarily mean you won’t be ‘working’ in retirement as it isn’t usually a cliff edge change and is more of a transition. However, I would hope you are doing what you want to be doing and not a job that is making you unhappy for the assumed need of income.

You should also be aware that for most, you suddenly have financial independence in retirement. Meaning you no longer have to depend on an employer paying your wage. You are suddenly in control of both your income AND expenditure.

Zac Castle