And the steps you need to take

Before we look at the hows of organising your finances and planning for your future, you need to understand the whys. Why are we encouraging you to think about this now, when you have a business that needs all of your attention in the present?

Simply, here are the facts:

  • If you’re a business owner, you don’t have your pension contribution dealt with automatically like you would do if you were an employee.
  • You have full control of your financial affairs, which has its obvious upsides, but also means that planning for the happy healthy retirement you desire is solely your responsibility.
  • Life expectancy continues to rise thanks to environmental factors, meaning many of us may be looking at a good 30 years of retirement.

30 years. Three decades is a lot of time to be out of pocket. If you’re so involved in growing your business that you don’t make time to plan for those three decades, you’re not going to have that blissful retirement that you worked so hard for all your life.

How can you prevent that from happening?

It’s simple: Plan effectively, now.

A clear structured approach to retirement can provide you with a strong foundation which maximises income, takes advantage of tax breaks and provides security for your future.

How do you start?

1. Decide on the life you want

The earlier you start thinking and planning, the better. Don’t wait until retirement age when it’s too late to think about it. First, you’ll want to assess your finances now and calculate how much you can realistically contribute each month. Also have a plan in place of when you’d like to retire and how much money you’d need to put away each month for a comfortable retirement – this will put a little pressure on you to make sure you’re actually contributing to your own personal pension pot each month. Plus, the sooner you start to prepare, the more likely you’ll be able to retire early.

2. Get writing your retirement plan

Are you a Ronald McDonald or an Elton John? (What on earth does that mean?) Does your business solely rely on you or can you sell it/hand it down to a family member? Consider how you are going to exit the business – what’s going to happen to it when you retire? Consider also any personal goals you have. Do you want to get into property investment, for example? These plans will need to be factored in and planned for

3. Consider Company Vs Personal when it comes to pension contributions

A really important consideration to factor in when you’re planning, is how you’re going to make the contribution – because you’re going to want to be as tax efficient as you can when you do so.

Usually, you should make pension contributions to your pension direct from your company as an alternative to paying them personally because there can be significant tax advantages. Making personal pension contributions by withdrawing funds from your company is more expensive due to the increased dividend tax rates you’ll face. With a personal pension, the maximum you can personally invest (and receive tax relief on) is 100% of your salary, subject to an annual allowance limit of £40,000. However, contributions that are made directly from your company into a pension are not restricted by your salary – you can invest the full annual allowance maximum.

Deciding which is best might be a little confusing, as it can depend on your band of income, drop us an email at discovery@a4g-llp.co.ukor pop a note in the contact form below to get advice for your specific situation.

And don’t forget…

You will get a Basic State Pension

The State Pension is a regular payment from the government, that is separate from any personal or workplace pension that you may have. Find out when you are eligible for your state pension and how much you will get. The basic rate increases every year by whichever is higher: CPI (consumer price index), 2.5% or average percentage growth in wages.

You will still have options later

When it comes to managing your pension later in life, you will be able to choose how you wish to draw your money, based on your circumstances. You may opt for the security of regular income by investing your pension pot into a lifetime annuity. You’ll get a chance to think about how you want to provide for your loved ones when you pass away. You may choose a more flexible option by opting for a Flexi Access Drawdown, taking taxable income at times that suit you.

There are of course many other options, but they require quite a lot of detail to explain!

Okay, so you’ve started by dreaming up your tomorrow – that’s the easy bit. The hard bit we find most Business Owners struggle with is putting an actionable plan in motion today.

We can solve that problem in our one-time Retirement Calculator Session. We’ll provide you with a long-term plan for your whole life, that will cost you less than one week’s pay. You’ll come away from this session feeling:

  • Prepared for the future, with a knowledge of the minimum amount you would need on the sale of your business or home in order to secure a comfortable retirement income
  • Less financial fear, when we discover and target any shortfalls you may have in your current monthly savings
  • Equipped to move forward with the real figure you need to save per month in order to secure the retirement income you desire
  • Adjust your levels of savings based on fluctuating interest and inflation rates
  • Motivated (and sometimes relieved!) when we calculate how much longer you need to work for before retiring based on your current savings level
  • At peace that you’re heading on the right road to retirement

Get in contact with our sister company, A4G Wealth, using the form below. They are a group of independent financial advisers who will take the time to sit down with you and discuss the options you have whilst saving to retire.

Want to find out more?

Call us on (01474) 853856 and we will put you in contact with one of our advisers, or send us an enquiry by clicking below.

Send us an enquiry

Share this article