When you consider accessing your pension pot there are many things to consider. Taking retirement income requires careful planning to make sure you have all financial bases covered.
Most people are now aware of pension freedoms. Since 2015, anyone 55 or over can access pension savings if they built up a pension pot during their working life.
This flexibility enables people to live out retirement as they choose. They can decide how, when and how much pension income they receive. However, with additional choices come greater responsibilities.
People are living longer. Some choose to carry on working in some capacity in their 60s, 70s and longer. There are issues around income tax, paying for care fees and considering inheritance tax.
All of the above mean that taking retirement income should be planned carefully. It is not something to be rushed. Any decisions should be made having taken good advice.
Preparing to retire
It’s easy drifting into different phases of life. Where retirement is concerned, the stakes are raised. There are many things to consider. Drifting is not an option. You should prepare.
Decisions taken during teenage years, after education and even in middle age come with the benefit of time. You can usually adapt, change or even reverse decisions completely.
When you approach retirement, although there are hopefully many years ahead, decisions taken can have greater consequences than ever.
Starting with a checklist can help approach pensionable age with confidence. Ideally, you should do this in the 12 months before your planned retirement date.
Always begin with your pension paperwork. Are there any restrictions, charges or limits associated with your pension pot and how you can access it?
Have you got any other pensions, no matter how small? If you have, now would be a great time to consider your options – combine them, switch to other forms of investment or leave them where they are. Such decisions should be done in conjunction with independent financial advice.
Understanding what you want from retirement will help you make informed pension decisions. Do you need a lump sum to clear debts, make big-ticket purchases or help family members?
Do you want a regular, fixed income during retirement? Perhaps a series of lump sums would suit your plans, a one-off tax-free lump sum following by regular drawdown payments, or a mix of all options?
Other considerations might be your health, or what you’d like to happen to any remaining pension monies when you die. That always sound morbid, but it should be considered as early as possible to enable you to plan what happens to your estate.
Regulated financial advice
Not all pension schemes are the same. Taking advice from an independent financial adviser will guide and advise you what can and cannot be done when it comes to accessing funds. This gives peace of mind when you need it most. It also empowers you to make the best decisions to suit your lifestyle – now and in the future.
Please be aware the value of investments or income from them can fall as well as rise. We’re independent, and we’re here to help you make informed decisions.
Call us on 0808 1234 321 or firstname.lastname@example.org to arrange a no-obligation chat.