It’s worth looking ahead

As you start to approach retirement, it can be crucial that your finances are in good shape. Knowing what that means will depend on the type of retirement you have in mind. Not only your retirement aspirations but how much savings and investments you have and whether or not you’re going to stagger your retirement so that you can retire gradually.

Focusing on pension contributions

Pensions can be highly effective retirement savings vehicles, particularly if you start earlier, due to the tax relief on contributions. In the 2025/26 tax year, for basic-rate taxpayers, a £1,000 pension contribution effectively costs £800, while higher-rate taxpayers pay £600, and additional-rate taxpayers pay £550.

Most individuals can contribute up to 100% of their UK relevant earnings or £60,000 annually (2025/26 tax year) while benefiting from tax relief up to age 75. If your income is very high, your pension annual allowance might be lower, but unused allowances from the previous three years can be utilised under carry-forward rules.

Be aware of inheritance tax changes

Starting from 6 April 2027, most unused pension funds and death benefits will be included within your estate for inheritance tax (IHT) purposes. Which means your pension could be useful if you are going to use it as a form of income, but you would need to be more careful if you’re planning to pass it on as you would be liable to an IHT rate of 40% on amounts exceeding the existing thresholds.

Maximise your tax allowances

Several tax allowances can enhance your investment strategy. You can invest up to £20,000 a year (2025/26 tax year) into Individual Savings Accounts (ISAs), securing tax-efficient growth and withdrawals.

Other allowances include the personal savings allowance, dividend allowance, and Capital Gains Tax exemption, allowing for tax-free interest, dividends, and gains within specific limits. We can help you in optimising these allowances to ensure your portfolio is structured for maximum tax efficiency.

Investments do not include the same security of capital which is afforded with a cash account.

The tax treatment depends on the individual circumstances of the investor and may be subject to change in the future. We recommend that the investor seeks professional advice on personal taxation matters.

Prioritise yourself

Retirement should be an exciting time in your life. A time when you can finally relax and enjoy spending your time how you wish. However, it can also be a time of uncertainty, especially if you haven’t planned for it in advance. One of the most important things to consider when planning for retirement, is your overall well-being and quality of life.

The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than originally invested.

The favourable tax treatment of ISAs may be subject to changes in legislation in the future.