A QUESTION OF RETIREMENT

By Sheila Frampton

Retirement is one of life’s major events – your life suddenly undergoes a complete change. Many retirees look forward to retirement and then end up feeling ‘lost’ and finding that it hasn’t lived up to expectations.

In some ways, living through the Coronavirus crisis and being in lockdown has given many of us a taste of what retirement could be like.  After a few weeks, when we’ve completed all the jobs that need doing in the house and garden, we start ‘climbing the walls.’

Planning your retirement and thinking about the relevant questions can make a difference. Are you going to move home – to downsize, move nearer family or to move to a favourite place?  How are you going to spend your time?  Will you be able to link up with old friends or find new ones?  These are all important if you’re going to enjoy your leisure time – and given our increased life expectancy, we may spend many years in retirement.

We have found that the top 10 most frequently asked retirement questions include the following:

1. What age can I retire?
2. How much state pension will I get?
3. How do I claim my state pension?
4. What happens to my pension if I work past retirement?
5. Will I still get a pension if I retire abroad?
6. How much money will I need for my retirement?
7. How can I prepare for retirement?
8. What can I look forward to doing in retirement?
9. Should I downsize my home?
10. What should I look for in a retirement property|?

What age can I retire?

This isn’t a question that’s easy to answer. It all depends on your age and your financial situation.  If you have enough money to fund your retirement, you’ll be able to stop working and enjoy more leisure time at any age. If you’re reliant on a state pension, it’s important to work out what you are entitled to and what age.

State pension age is a ‘moving feast’  – there are more people aged over 60 in our population than there are under 16s. Life expectancy has also increased so we’ll all spend more of our adult lives in retirement than our parents or grandparents and this is going to cost the State more money. The Pensions Act 2014 requires the Government to review state pension age every six years. Currently, the state pension age depends on when you were born.

• The current basic state pension age for both men and women is 66 and 2 months for people born in 1955 and this will gradually rise by 2 months a year until it reaches 67.

• Those approaching pension age in 2034 will not get a state pension until they are 67 and in 2044, the age will increase to 68 – and the Government has plans to bring this forward.

How much state pension will I get?

• In 2019/20 the full state pension is in the region of £129.20 to £175.20 per week and whether you get the full amount depends on your qualifying years of National Insurance payments.

There are two types of state pension, which applies to you depends on whether you reached state pension age before the new state pension came into force – the new state pension and the old basic state pension.

The Basic State Pension is a regular payment from the Government based on your previous National Insurance contributions and you receive this is you reached state pension age on or before April 2016 – that is, if you are a woman born before 5 April 1952 or a man born on or before 5 April 1951. The basic station pension includes two parts:

• A basic state pension based on your previous National Insurance Contributions
• An additional state pension also based on your National Insurance contributions, but this takes into account your earnings and whether you claimed benefits too.

If you have fewer than 30 years of contributions you’ll get 1/30 of the full state pension amount for each year of contributions.

The New State Pension is a regular payment from the Government that most people can claim in later life.  You can claim this at state pension age if you have at least 10 years National Insurance contributions and are:

• A man born on or after 6 April 1951
• A woman born on or after 6 April 1953

How do I claim my state pension?

You won’t normally receive your State Pension automatically. To make a claim:

• You should get a letter from the pension service no later than two months before you reach state pension age. If you don’t, you can still make a claim.  If you don’t receive a letter, give the Pension service a call on 0800 731 7898.
• You can claim your pension online, over the phone or by post. You will need your National Insurance number when you make a claim and may need to provide evidence of your date of birth.

Can I claim my state pension and keep working?

YES.  Any money you earn won’t affect your State Pension but it may affect your entitlement to other benefits such as Pension Credit, Housing Benefit and Council Tax support. It is worth remembering that State Pension is taxable so when added to your earnings it may put you into a higher tax band.

When you reach State Pension Age you won’t have to pay National Insurance any more even if you keep on working.

Will I still get a pension if I retire abroad? 

YES. You will still get a state pension and this can be paid to either a UK or foreign bank account but the level of annual increases may be affected.  Before Brexit, if you moved to a country in the European Economic Area the increases would have been the same as if you were in the UK. A few non-EEA countries have this arrangement but you will have to check regulations which will be in place after Brexit. It may be more difficult to retire abroad post Brexit.

How much money will I need for retirement?

Again, this depends on you and your circumstances. You need to think about basic living costs – mortgage if you’re still paying one, service charges, hobbies, travel, car or home repairs and long-term health care.

One suggestion is that you’ll need 70% of your pre-retirement income to live comfortably.

It is worth finding out if you paid pension contributions to a former employer. It may be that you worked for a few years for a company in the 1970s or 1980s and you paid pension contributions that were invested. The result could be a ‘forgotten pension pot’ and you may be able to claim a substantial amount or take a regular pension payment.

How can I prepare for retirement? 

The best way to prepare for retirement is to prepare a plan, taking into account:

• Think about what you’re going to do with your time –consider new hobbies or interests –something you’ve always wanted to have the time for.
• Find new friends -join a club or an evening class or invite neighbours in for coffee. If you move to a retirement development, you may find yourself in the heart of a community of like-minded people. The WI provides women with a new social circle of all ages as does the U3A.
• Be positive and go out and do things – there will be lots of free things to do in the local area – exhibitions, talks, events to attend.
• Keep fit – join a gym, buy a cycle, and join a local club, take up swimming, dancing, yoga or walking
• Keep your mind active – learning a new language is one way of maintaining your brain function.

What can I look forward to doing in retirement?

After years of having to go to work, your time will finally be your own, you’ll have more freedom to travel, time to pursue new hobbies and enjoy an active social life. You’ll be able to explore the area you live in on foot or by bike and to discover new areas. You may decide to move to a new home, to the coast or the countryside. You’ll be able to build new healthy habits, dedicating more time to keeping fit and eating regularly instead of snatching a sandwich at work and eating dinner when you come home late.

Should I downsize?

Retirement is a time when we begin to reassess our situation. If you have a large, older house that takes a lot of heating and is set in gardens that require lots of maintenance, you might consider downsizing – or, as it has been called, ‘rightsizing.’

A new home can be more energy-efficient and you will have fewer bedrooms to clean and heat. If you move to a retirement community, there could be a lot of benefits and downsizing does not necessarily mean compromising on space.

Look for retirement specialists like Beechcroft who build homes that provide plenty of living space regardless of the number of bedrooms.

Living on a Beechcroft development you’ll be at the heart of a community of independent, like-minded people, able to maintain your privacy but with a new social life on hand, Beechcroft developments feature beautifully-landscaped, fully maintained grounds and new homes have outside space where possible – balconies, terraces, roof terraces and private gardens.

An Estate Manager on each development is responsible for the maintenance of the communal areas and the upkeep of both landscaped grounds and private gardens. On Beechcroft developments, this service has proved extremely useful, particularly for those living alone, during the lockdown.

Retirement communities have service charges but when you consider the costs include gardening, cleaning of communal areas and external windows, keeping an eye on properties whilst you’re away and having someone on hand is worth a great deal as you age. Beechcroft builds in the most attractive market towns and villages in the South East, details are on the website at beechcroft.co.uk

Even if you don’t downsize, consider decluttering – it can be extremely satisfying to get rid of unwanted clutter.

What should I look for in a retirement property?

• Make sure you are aware of any ‘exit’ fees or deferred charges that have to be paid if you sell or by your family if you pass away and they need to sell the property. Beechcroft retirement properties may be sold on the open market as long as the buyer is over the age of 55.
• Location is a priority – think ahead to a time when you may decide to give up your car. You’ll want to have good shops and services within walking distance, easy access to transport links and a good café, restaurant, or pub nearby. Maybe you want to move closer to family or friends or to an area that you have always wanted to live.
• Choose somewhere with a lovely setting – landscaped grounds, nearby parks or open countryside which will provide you with places to walk and cycle.
• Make sure the house or apartment has all the features you need – as well as a high-quality specification. Having a balcony, terrace, roof terrace or small private garden can make all the difference to your life. If your new home is currently equipped with a full range of integrated kitchen appliances, vanity units and mirrors in the bathrooms, high-quality floor coverings and fitted wardrobes already included in the price it will save you money and a great deal of stress when you move.
• See if the retirement specialist offers ‘easy move’ schemes which help you sell your property or help you make the move.
• Look for efficient estate management services – as you age, having someone around to carry out maintenance and to be on hand to offer help and advice can be invaluable.

Where can I get more information on pensions?

The Pensions Advisory Service is an independent organisation that gives free information and advice on pension planning, including state, personal, workplace and stakeholder schemes.

Helpline:  0800 011 3797

Website:  www.pensionsadvisoryservice.org.uk