Pension Awareness Week: Are your retirement pieces in place?

Planning retirement

Planning retirement can feel a lot like tackling a jigsaw. You start with the corners, the pieces that give you a framework for the rest of the picture. For most dentists, these corner pieces are your NHS pension, private pension, State Pension, and other assets such as the proceeds from selling your practice. Once you understand the size and timing of each, the rest of the retirement picture starts to come together.

Timing is key. Your financial needs will change as you move through different stages of retirement. The early years often come with higher costs - you might take more holidays, treat your family, or encounter one-off expenses such as weddings or the arrival of grandchildren. Later on, spending typically slows, as health, energy, and priorities shift.

The NHS pension: The first corner piece

Even if you are now private, any NHS service contributes to your retirement. The NHS pension provides guaranteed income that rises with inflation. For those with significant NHS service, it can form a substantial part of your retirement. Even a small NHS pension is valuable because it offers certainty and security for life.

The State Pension: Another guaranteed source

Many dentists retire in their early sixties, before the State Pension starts. Without careful planning, extra funds may sit in a savings account and increase tax or inheritance issues. Using temporary income from personal pensions or practice sale proceeds can bridge the gap until the State Pension begins. Understanding when and how much you will receive from both NHS and State Pensions is essential.

Personal pensions: Flexibility and choice

Personal pensions can fill gaps that form due to circumstances like early retirement and moving from NHS to private, as well as offering flexible options in retirement:

• 25% tax-free lump sum for early retirement spending
• Guaranteed income for life if needed
• Flexible income you can adjust as circumstances change

Tax treatment depends on individual circumstances and may change.

Other assets: Completing the picture

Savings, investments, and proceeds from selling your practice can provide additional capital. These can support early retirement spending or fund discretionary lifestyle choices.

Investments can fall as well as rise and you may not get back the original amount invested.

An actionable tip for Pension Awareness Week

Ask yourself:

• Do I know exactly how much my NHS and State Pension will pay and when?
• Could I optimise temporary income sources to reduce tax and maximise flexibility?
• Are my savings and investments aligned with my planned lifestyle?

Mapping this with a cash flow model gives clarity. Think of it as the picture on the front of your jigsaw box. It shows the peaks and troughs of expenditure and ensures every piece fits.

Need help completing the puzzle?

Speaking with a Specialist Financial Adviser at Wesleyan Financial Services can help put the missing pieces in place. Charges may apply.