In 2015, radical, positive changes were introduced around what we can do with our pensions when we draw them. We have tried to give a flavour of your options on this page but if you would like more detailed information please download a copy of our retirement options brochure below or better still let’s have a chat.
With freedom comes choices
We now have much more freedom to do what we want with our pension assets, and can access them from the age of 55. This is clearly good news. However, freedom brings ever-increasing choice and making the wrong decisions can have big consequences for your retirement lifestyle.
From an annuity or flexi-access drawdown to phased retirement, the options are varied and complex. What you need during early retirement may differ considerably to what will be required in those later years. Striking the right balance between drawing income and preserving your capital – even providing for the future of a spouse or other family members – calls for expert insight and guidance.
How much will I need when I retire?
First, we will sit down to understand your current retirement needs and discuss what could change further down the road. Cashflow modelling can give you an insight into how much money you are likely to need in retirement and whether you are on track to support your lifestyle. We will also take a close look at your current retirement assets – whether that’s pensions, property, or any other type of investment – to get the full picture of your position. Then we can make our recommendations.
What options are available for drawing my pension?
Most personal pensions and other money purchase pensions will now offer you a variety of options as to how your pension is paid. You will need to decide whether to take tax-free cash or choose to draw extra income. Most people will take a lump sum but the choice is not always clear cut if your pension offers enhanced levels of income or provides tax-free cash on unattractive terms – we will help you make the right choice for you.
You will then need to decide how to draw the income element of your pension that is not available tax-free. Some people who want a guaranteed, regular income will warm to an annuity. If this is you, we will help you choose the right type of annuity and then review all of the providers to get you the best possible terms.
Nowadays, many people prefer a more flexible option that allows them to draw money as they require it rather than being tied to a fixed amount of income. A Flexible Drawdown plan will allow your pension to stay invested for your benefit until you decide that you want to draw money. You can make withdrawals as you need them and any remaining money may be left to your family when you die.
All of the different options have their strengths and weaknesses and we will help you choose the strategy or combination of solutions that is right for you.
Keeping your retirement planning on track
You may likely be looking for income from your retirement assets, for example. But as none of us can be sure how long we will be around for, careful ongoing planning is crucial to maintaining an ongoing income stream. On the other hand, just because you have stopped working it doesn’t mean your retirement assets should. So good retirement planning means striking that balance between growing and preserving your retirement pot, while receiving the money you need.
This requires continuous assessment of both your position and your options. We will manage your pensions and other income-producing assets to make sure your strategy is suitable for your changing needs – and also takes advantage of any tax saving opportunities.
John and his wife Sarah are in their early sixties. Sarah suffers from a chronic illness and although John was trying to care for her, he held a senior job and commuted to London. To enable him to look after Sarah, he wanted to take a lower paid part-time local role. Although their savings would bridge the income gap in the short-term, they were concerned that they could run out of money in later retirement.More about John & Sarah