How to start planning
To begin with, you need to work out:
- when you want to retire
- how much money you need to live on when you do
- how much money you need to start paying into a pension.
To get an idea of how much money you'll need when you retire, try our Planning retirement tool. This will give an indication of how much you should be saving a month.
Retirement planning in action
Father-of-two David Ford is balancing the demands on his finances as he prepares for retirement in five years' time.
David, a financial adviser, says his wife comes first when he thinks about money matters. "Everything I do day-to-day, if it affects my life it affects Eva's. We have completely joint finances."
David has also given financial help to his daughter and her family with their move into a new house and gave his son a loan for a round-the-world trip.
David's retirement savings strategy
"I'm really trying to save through my pension," says David. "I don't need to save for things like holidays, instead I pay for things like that out of my current income."
As well as pensions, cash ISAs can be useful in saving for retirement as they offer easier access to your money if you need it. They can also be useful if you have exceeded the maximum amount you can save into your pension that benefits from tax relief. For this tax year the maximum amount is £50,000 but is due to reduce to £40,000 in 2014-2015).
Like Cash ISAs, Stocks and Shares ISAs offer tax benefits, but they're not suited to quick access. A Stocks and Shares ISA will not be right for you unless you're able to commit your money for at least five years.
David says: "We both have ISAs, and have some other investments like stocks and shares – some in ISAs, some not.
Generally Eva holds the non-ISA investments because I'm a higher-rate tax payer and she isn't. We've also got savings accounts."
Tax efficient savings for retirement
Tax relief is available on pension contributions. The precise way this works depends on if you pay into an occupational, public service or personal pension scheme.
ISAs also offer a tax-efficient way of saving for retirement, as the interest and dividends you receive in an ISA are tax-efficient. Any profits from ISA investments are free of Capital Gains Tax.
The ISA allowance for the 2013/14 tax year is £11,520, of which up to £5,760 can be in a Cash ISA.
We offer a range of:
- tax-efficient ISAs, from our Stocks and Shares ISA to the Cash e-ISA
- savings accounts
How HSBC can help
Check if you qualify for advice
If you've already made some retirement provisions and are not ready to take a retirement income, our Financial Advisers can help you review them to see how your investments are performing and whether your projected income in retirement will be enough to let you do the things you want.
See our article on approaching retirement.
If you have £50,000 or more in savings and investments (not pension funds), you may be eligible for HSBC Premier Financial Advice. See the full eligibility criteria.
If you don't qualify for HSBC Premier Financial Advice or if you'd rather not pay for advice, see other ways we can help.
Eligibility requirements
HSBC Premier Financial Advice is available to UK residents who have £50,000 or more in savings and investments and who are at least 18 years old at the time of the initial consultation.
You'll also need to have an HSBC Current Account or Savings Account for us to be able to deduct your fee. We can accept payment from a first direct Current or Savings Account too.
To find out more:
- See our HSBC Premier Financial Advice pages or;
- Call us on 0800 328 1298 to book an initial no-obligation consultation with a Premier Client Manager. Lines are open Monday to Friday 8am to 9pm and 9:30am to 7pm on Saturday. (Textphone: 18001 0800 028 0126).
If you don't qualify for HSBC Premier Financial Advice, or if you'd prefer not to pay for advice, see other ways we can help.
If you are not a UK resident, see our HSBC Expat service.
Things you should know
Everyone's circumstances are different, and what applies to one person may not be right for the next. The suggestions in the article are based on general assumptions. It isn't intended to provide advice or recommendations on your individual financial needs.
The value of investments (and any income received from them) can fall as well as rise and you may not get back what you invested. For some investments this can also happen as a result of exchange rate fluctuations as shares and funds may have an exposure to overseas markets. You should aim to invest for at least five years.
Pensions are not normally accessible until retirement benefits are taken. The value of tax treatment will depend on your individual circumstances and may be subject to change in the future.
The scenario included in this article is fictional and is not based on a real life scenario.
