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How smart investments could lead to a better retirement

23 October 2017EconomicsEquities

How smart investments could lead to a better retirement

  • Rising inflation rates are causing concern for 65% of UK consumers1
  • Around 10% of over-65s are currently still in employment2
  • Future-proofing investments could be a smart option as State Pension age increases

Whatever your age, the investments you make today can affect the quality of your retirement. Our working lives have changed dramatically over the last few decades, and as the population has risen so too has the average age of retirement. Looking to the future can be tricky in an uncertain financial climate – but with smart forward planning you can make sure you're prepared to get the most out of yours.

The way we retire is changing

With longer life expectancies and higher costs of living, planning ahead certainly isn't as easy as it used to be. This August saw the UK inflation rate rise to 2.9%, resulting in 65% of UK consumers3 stating that they were concerned about the rising prices and how it would affect their future plans. On top of this, the past two decades have seen people working longer to ensure financial security through their retirement – some 10% of over-65s are currently still in employment4.

This trend is likely to continue for some time yet, partly due to uncertain global markets and a rising population seeing the government amending the way they pay out State Pensions. For women especially, the next few years will see a significant change in the State Pension age. In April 2017, women could start withdrawing their pension at 63, while men could retire at 65. The age will start to increase by a few months over the course of the next few years, until by 2028 both ages will have increased to 67.

Preparing for your retirement

Even if your retirement years are a long way off, it's always worth planning early. An important consideration in preparing your investments for retirement could be future-proofing your portfolio with a diverse range of assets. It makes sense to look at longer term opportunities, especially for younger investors, but ensuring a regular cash flow and consistent capital gains are just as important to maintain flexibility in your later years. You might also consider putting some funds into areas that experts have earmarked as potential sources of growth in the future.

Planning for an early retirement

If you're aiming to retire early, the flexibility of your portfolio could become even more important. As you won't yet be able to withdraw from your State Pension, being able to use your assets could become crucial and a balanced mix of investments may provide a steady income at this time5.

Those who have already maxed out their UK tax quotas – income tax, capital gains tax, ISA, dividend allowances and pension* contributions for example – might consider offshore bonds. These can be used to supplement your regular income in the years leading up to your retirement, with 5% of your original investment available for withdrawal each year tax-free**. If you don't use that allowance, the 5% rolls up to the next year, making it 10% and so on. Therefore the entire original investment amount can be withdrawn over 20 years.

If you've already retired

For those who have already retired, learning about ways to best distribute and pass on wealth further in the future could be a smart move. As Citi Relationship Manager Christopher Paris says, "Many of my retired clients have accumulated property throughout the UK and due to a significant rise in property value, they are now starting to consider Inheritance and Tax Planning."

"In consultation with our client's tax advisors, we have recently helped our clients with inheritance tax planning and legacy planning, which gives clients great comfort knowing they have a tax efficient structure in place when passing down their wealth", explains Christopher.

With specialist help from Citigold Wealth Management, you can manage your investments on your terms. Speak to us today to find out more aboutwhich investments may suit you.

*Please note that Citi does not provide pension advice. We strongly recommend that clients seek independent pension advice.

**Please note that Citi does not provide tax advice. We strongly recommend that clients seek independent tax advice to determine whether this product fits their requirements. Investments are subject to the prevailing tax regime which may be subject to change and could affect the potential benefits available to you.

Investment returns can go down as well as up. Like other investment products, Offshore Bonds are subject to investment risks, including possible loss of some or all of the principal amount invested. Past performance is not indicative of future results, and investments can go down as well as up.






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