The number one question we get asked when it comes to pensions and retirement is how much money do I need? Though there is no one single answer for everyone, the process of figuring out your magic number will not be dissimilar to others. Though this is best done with the support and guidance of a qualified IFA, to get you started on the though process please review our article, How Much is Enough in Retirement?
Bigmore Financial Planning will provide the helping hand to support you in achieving your goals.
You can choose to receive a pension when you reach a pensionable age, the earliest of which is 55. You will usually have the option of delaying your pension, in return for higher payments later on.
When you retire, you can do several things with your pension pot(s). You can firstly take a 25% portion of the money out tax-free, with the rest being left to grow – known as drawdown. You can then take money out of this pot to fund your lifestyle or use it to buy an annuity (a regular income) – this money is taxed according to your overall income.
Alternatively, you can invest the whole amount in an annuity, with the first 25% of each payment being tax-free, or keep the whole amount invested, with each withdrawal being tax-free at 25%.
In 2015 there was a complete overhaul of Pension Legislation with the introduction of Pension Freedoms. It is now possible to withdraw any amount of your pension at any time from age 55 (57 from 2028). This offers great freedom and choice to clients, but the flexibility that Pension Freedoms provides does also bring about complexity. It is more important than ever before to receive pension advice from a qualified financial advisor.
