Your materials

  • Building a retirement income pyramid

    In the foundations chapter we looked at the different types of spending and how much you expect to spend.

    In this document we look at how to build a pyramid where at the base your essential spending is matched by guaranteed income

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  • Defined benefit pension options

    A Defined Benefit pension is provided by an employer. The amount of pension you are entitled to is determined by a formula, usually a fraction (e.g. 1/80th) times a specified amount of earnings (e.g. pensionable pay) times the years you worked for that employer. Although you may have been required to pay contributions towards your pension, these contributions would not have been towards a Money Purchase pension.

    This document describes the options that may be available to you, there may be more than you thought.

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  • Money purchase pension options

    A Money Purchase pension is one where contributions paid by you and/or your employer are invested to create a pension pot which can be used to provide you with income and lump sums when you retire. Your benefits are determined by what is in your pot, not by a formula which would make it a defined benefit pension.

    This document describes the many options that may be available to you.

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  • House options

    If you are fortunate enough to own your house then it is probably the most valuable asset you possess. If you still have a mortgage outstanding, you will also need to read the section on Borrowing in Retirement. You may also inherit a house during your retirement – that scenario, together with ownership of buy-to-let properties, is covered towards the end of this section.

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  • Investment options

    Investment markets rise, then they fall, then they rise again. We are not referring to daily movements that often are much less than 1%. We are talking about periods where markets fall or rise by 10% or more in a short period, often referred to as market corrections. The technical term for this is a Sequence of Returns. However, we will refer to this as boom and bust.

    This document looks at investment risks and your options to mitigate them. It also looks at what you need to consider when building a retirement income pyramid and whilst on the retirement bridge.

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  • Where to invest

    In the Foundations section we examined your attitudes to investing. In the chapter Investment Options we look at the investment principles and theories you need to consider to obtain the best returns within the investment risk you are willing to take.

    In this section we address three questions:

    1. Are your investments in the right place?
    2. Are your investments appropriate for you?
    3. Have you got new money to invest?

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  • Cash options

    There are three reasons for holding cash in retirement:

    1. in the lead up to a large purchase;
    2. to manage fluctuations in your retirement wealth; and
    3. to cover emergencies.

    In each situation, your personal attitudes and outlook will determine how much cash you hold at any time and where it is held.

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  • How much can I spend?

    You have an amount of wealth and you wish to make it last the rest of your life. There are 4 factors that determine how long your wealth will last:

    • How much wealth you have;
    • How much you spend;
    • The investment returns you achieve; and
    • When in the investment cycle you make withdrawals to fund your spending.

    If these factors combine to create a scenario where your wealth will outlast you, then you can safely spend that amount. But you do not know how long you are going to live. We look at ways you can manage this uncertainty.

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  • Borrowing in retirement options

    Lenders become wary of dealing with older people, and not just because of historical attitudes to age.

    Put yourself in the mind set of the lender. They want their money repaid. If someone is living off their wealth, and is asking for credit, why are they not using their wealth? Is this a sign they are about to run out of money and, if so, how will the loan be repaid? This is more risky than lending to someone who is in regular employment and has a good employment history.

    Therefore, as you age you may find the number of available borrowing facilities reduces and the cost of borrowing increases.

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  • Care funding options

    More than 25% of 65-year-olds will need a significant period of care. As you get older, that percentage will increase. This section covers whether you should be paying for your care and, if you do, the alternative ways of paying for it.

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