I’m planning to retire, have several savings plans in place and am worried that my savings might not last
Careful planning, secure future
As you approach retirement careful planning in terms of how to use your pension pot, how much tax-free cash can be taken and what’s the right investment strategy for your future financial wellbeing are pre-requisites. You may have several pensions accumulated throughout your working life, which may be better put together into one.
Consideration must be given to the income levels that are required, the right investment products to maintain your capital and the cost of various solutions.
This can be complex and worrying so it’s important you receive clear, concise, personal advice to suit your unique circumstances. All About Pensions offers this service, gained from years of experience in helping people plan for this most important stage of their financial life.
Call us now:
send us an email:
Michael enjoyed his job, being a board member at a large food retailer. At the age of 60 he was offered a generous redundancy package with certain enhancements to his final salary pension. Michael wasn’t sure if taking the package and his pension was the right thing to do, so he contacted us.
We reviewed the overall financial position, helping him create a cash flow model that incorporated his scheme and other pension pots that had been accumulated, in order for him to make an informed decision on something that could impact his financial well-being.
Prakesh had a generous final salary scheme that he had built-up whilst working for a major oil company, but also had a SIPP as he liked making decisions about investing his own money in the markets. Having been recently widowed, Prakesh was concerned that if he died soon after taking his pension, that there would be nothing left for him to pass onto his children.
We evaluated his scheme and went through the advantages, disadvantages and risks of transferring this to his existing SIPP, focusing on the differences regarding his death benefits. Prakesh decided to transfer his fund, achieving a cash equivalent transfer value of £1.2m, that can now be passed on after his death without incurring any inheritance tax or reduction in the fund.
Jane had several pensions that she had accumulated throughout her working life and needed some help making sense of the variety of options that were now open to her, having turned 62 and looking to retire.
We gathered the facts and presented Jane with a simple, clear and concise statement of all her plans, what benefits they offered and how much tax free cash and income she could expect to receive in the future.
Jane decided to take advantage of the new Flexi-Access Drawdown rules, taking her tax free cash over a number of years, together with income from a portfolio we constructed with an aim of maintaining her capital.
What are my pension options, as I’m over 55 and want to start to take things a bit more at my pace?
You have broadly 4 options when you approach the minimum age at which you can take your pension, these are:
- Leave it and do nothing. If you don’t need to access the funds let them grow in a tax free environment until you do.
- Flexibly access your savings. You can take the first 25% of the pot tax free and the rest, when you draw down, will be classified and taxed as normal income.
- Take your tax free cash and buy an income for life, which is referred to as an annuity. The income from this annuity will be taxed in the same way as income.
- Take it all as cash. Whilst this is the generally the least ‘sensible’ route, you may want to use your pension fund to pay off expensive debts, have a holiday of a lifetime or invest it in a way that isn’t permitted in your pension (i.e. Buy to Let).
I have quite a few different pension arrangements, should I bring them all together into one?
Once you’ve established what your retirement objectives are, it is likely that bringing your plans into one cost efficient and flexible plan is the right thing to do. Your adviser should firstly check that you aren’t giving-up any valuable benefits before transferring, particularly if you have an older scheme, and then discuss their findings with you.
We find that some older pension plans have high charges and poor performing funds, so getting these organised even before deciding what you want to do is essential.
How can I plan what is the right income in retirement, as I don’t want to run out of money in later years?
If you want surety of income with no investment risk, then you should be looking at buying a level or index linked annuity. Although at the current time annuity rates are low, as there is a direct link to interest rates.
Since April 2015 many people are accessing their funds flexibly and entering what is called a flexi-access drawdown arrangement. With the right investment strategy, you can plan to take a percentage of your plan out every year and try to keep the fund value static or even grow to take into account inflation and maybe higher withdrawals in the future.
In reality we find pensioners income needs go down after age 70 as there are only so many cruises to go on and places to see in the world.
We feature carefully selected pensions guides from the pensions regulator and government departments below. For more clear, concise guidance and latest news please visit our blog