It’s estimated that around 1.9 million workers aged over 50 find themselves juggling the competing needs of the younger and older generations, sometimes overlooking their own financial planning requirements. As a result, many feel under pressure to go on working for longer; others sacrifice saving for their retirement to help other family members.
Since Pension Freedoms were introduced in April 2015, people are now able to access their pension funds more flexibly and can take up to 25% of their pension as a tax-free lump sum, at age 55 or above. Pension drawdown, also known as income drawdown allows you to access a quarter of your private pension funds, without paying any tax, and also enables you to keep the remaining balance of the pension funds invested, ensuring it still has the potential to grow – unlike if you were to purchase an annuity.
The nights may still be long but the end of the tax year is fast approaching – so now is the ideal time to think about your pension. Here are six things you need to do to refresh your pension.
The most effective way to plan for your retirement is to think of it in terms of the lifestyle you aspire to and therefore the retirement income you will need to achieve that goal.
Since the introduction of the new pension freedoms in April 2015, more and more retirees have opted to take flexible withdrawals from their pension funds by going into what’s referred to as drawdown. The Financial Conduct Authority recently reported that drawdown has become much more popular, with twice as many pots moving into drawdown than go into annuities. But managing your own withdrawals, will you run of out money when it retirement?
Income drawdown is where you leave your pension pot invested and take an income directly from it, instead of using the money in your pot to buy an annuity (a regular guaranteed payment from an insurance company). With drawdown, the money left in your pot will continue to benefit from any investment growth.
There is an assumption that unless you’re going big and starting early, saving is a waste of time. That couldn’t be more wrong. Here are three reasons why even modest saving and small tweaks can make a huge difference.
From energy tariffs to mortgages, people who stick with the same pension provider year-in, year-out are at the greatest risk of losing out. The leading rates or most competitive prices are often reserved for those who compare the market, so the only way to cut your bills—or increase returns—is to look for a better deal. The same principle applies to saving for retirement: too many people have old or forgotten pensions that impose excessive charges or are made up of underperforming or otherwise unsuitable investments and assets. But there’s more to the pension problem than meets the eye, but carrying out pension checks can help your retirement income.
Before you fall foul of a scam, make sure you educate yourself on how to keep safe.
An increasing number of fraudulent companies and cold callers are targeting savers with pension scams, claiming they can liberate pensions for lucrative investments, only to make off with your hard-earned cash. it’s a problem we hear about often at Pension Works – and once stung, there’s very little recourse.
