A future of regular instalments
As many of us are living longer there is the chance that you will be retired for a long time. It is therefore important to make sure you have enough income so you are not worrying about how you will pay the bills.
What is the source of your income?
When we meet with our clients, we always start at the beginning and find out what income you have coming in and what you will need. These days when people reach retirement age, they may have more than once source of income for retirement in the form of either secure income (state pension, defined benefit scheme or a lifetime annuity) or flexible income (paid work, a drawdown scheme, savings, investments or a rental property).
How much income will you need?
We then discuss how much income you will need in retirement. Your spending is likely to change when you retire, you may no longer be commuting so you save money on travel however you will be home more so the household bills may increase. We take all this into account when we build a picture of how much income you will need.
Your pension and tax
Your pension income is taxable, like any other income. You can usually take up to 25% of it as a tax-free lump sum and the rest will be taxable at your highest marginal rate. The amount of income tax you have to pay really depends on your total income you receive for the year. We can help you work out when and how much cash to take from your pension so that you don’t end up paying more tax than you need to.
In reality, we can come up with a range of solutions that will meet your needs taking into account your tax positions, available capital and future plans. To investigate the different options available to you, please get in touch.
*Please note: A pension is a long-term investment not normally accessible until the age of 55 years old (57 from 2028) . The fund value may fluctuate and can go down, which would have an impact on the level of the pension benefits available.