Posted on: 4th March 2021
and saving for future financial goals are not as straightforward as they used to be. The perception of suddenly stopping working and picking up your state is not the same as years past.
freedoms are today’s focus on how and when you retire, changing in 2015 towards how you cash in your to allow more flexibility and freedoms than ever before. You’ll need to make a decision on what to do with the money saved towards your pension if saved into a defined contribution pension whilst working, when you retire or at age 55.
If you are reaching age 55 there could be a chance that you don’t feel ready to take your pension.
Now you could leave your pension invested and carry on contributing in order to provide more pension advice in Manchester from independent financial advisors Cheshire you can ensure that the pension is invested more efficiently and be able to navigate a clear cut action plan going ahead.income upon being ready to take it. By seeking
Another option on the table is to completely withdraw all your pension savings at once.
Naturally, this option does come with some serious drawbacks, most notably that you won’t be making an income via the pension when all funds have been withdrawn. This would also lead to a significant tax bill that will require paying. Although 25% of your pension will be tax-free, income tax will be put on the remaining at a high marginal rate, possibly the highest.
It is highly recommended that you seek professional advice from independent financial advisors in Manchester before undergoing this costly move.
What if you were to withdraw a lump sum of your pension and leave the rest to grow invested?
25% of the lump sum would be considered tax free and the rest would be taxable as income. This option means that the amount of tax that you’ll end up paying will entirely depend on whatever other sources of income you have coming in.
You may have heard of the word but not fully understand its meaning.
An annuity is a guaranteed income for life. The income depends on your savings in pension with which to purchase an annuity as well as your current health. When purchasing an annuity you are entitled to a 25% tax-free lump sum upon the start of retirement.
There is also the option of taking a flexible income from the pension whilst invested.
You can take an income at whatever rate you decide but the responsibility falls on you to ensure it is enough to last throughout retirement. This is an area for conversing with the best independent financial advisers in the UK to establish a withdrawal rate that is sustainable for you whilst ensuring the rest of your pension stays invested.
However retirement is looking for you, the ability to plan and get the very best plan of action falls into getting the right advice. Contact the team attoday for help saving for future financial goals.