At the beginning of your career, retirement seems like a long way away. But often, before you know it, retirement is actually just right around the corner. If you’re in your 50s, retirement is no longer a plan for the future, but a rapidly approaching reality. Even if you have a solid plan that you review regularly, now is a great time to reevaluate your investments to ensure you’re on track to meet your goals.
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
Refine your targets
Since retirement is right around the corner, it’s essential that you take the time to delve deeper into your plan. At this point, there’s still time to pivot or change strategy. And as you’re closer to retirement than ever, you should have a better idea of what kind of lifestyle you’d like to live after working while taking into consideration current economic factors like expected investment returns and inflation rates.
One surefire way to ensure you’re prepared is to seek professional financial advice. A financial adviser will be able to provide insight into your current portfolio and how long your retirement pot could last you. Advisers can help you evaluate whether or not you need to change anything with your current saving and investment strategies. This will help you feel secure as you work toward your future.
Explore pension tax relief
When you’re in your 50s, you’d be hard-pressed to find a better savings tool for retirement than a pension. This is because the tax relief you receive on personal pension contributions can significantly enhance your savings pot.
Every time you make a pension contribution, you get government-provided tax relief, which means you essentially get money for nothing!
For a £1,000 pension contribution, it would only currently cost you:
- £800 if you’re a basic rate taxpayer
- £600 if you’re a higher-rate taxpayer, or
- £550 if you’re an additional rate taxpayer (assuming you have at least £1,000 of income in the higher/additional rate bands).
This relief can help you grow your retirement savings more quickly and efficiently. For anyone in their 50s, focusing on their pension and taking advantage of tax relief is a smart strategy.
Take advantage of your tax allowances
When you invest your money, there are a number of tax allowances available for you to take advantage of. One of these allowances is the Individual Savings Account (ISA). As of the 2023/24 tax year, you are allowed to invest up to £20,000 per year. ISAs allow you the flexibility to withdraw your money without paying tax and are a valuable income source for future retirees who contribute to a tax-efficient retirement income portfolio.
Obtaining professional financial advice will help you optimise your allowances and structure your portfolio for maximum tax efficiency. By leveraging these allowances, you can make the most of your investments and secure a comfortable financial future.
Need guidance navigating the world of investing?
If you want to reach your long-term financial goals, consider investing. When you invest your money, you have the potential to earn a higher return than if you were to keep it in a savings account, even one with a relatively high rate. Investing helps your money grow substantially over time, giving you a better chance of achieving your financial goals. For more information about investing, please get in contact with the experts at Dental & Medical Financial Services.