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.