5 pension tips for the over 55’s
1) Financial Planning
The starting point for every investor should be to have a comprehensive financial plan. This takes account of all current assets and liabilities, the projected savings and investments that will be made between now and retirement, how the money is invested, and the manner in which it’s likely to be withdrawn in retirement. Noting the specifics of your existing investments will reveal the most probable future path for your investments and the income you can expect in retirement. It’s well known that people who plan are more likely to achieve their goals and gain great satisfaction from being aware of their situation. Getting a plan should always be the first step.
2) Watch out for tax
The UK government has made it an attractive option to invest long-term through pensions. However, the rules are constantly changing as a result of the cost of pensions to the Treasury being so large. This means that it’s very easy to end up paying more in tax then you should —taking cash out at the wrong time or in the wrong order from your different investment pots could have an adverse effect. Similarly, how you invest can also make a difference. Always be aware of the impact tax can have on your retirement.
3) Be careful with your existing investments and avoid mistakes
Many old-fashioned investment products have penalties or tax consequences if you sell them. Often, these can be mitigated through careful planning but it’s common for people to make mistakes. The product provider isn’t under any obligation to warn you of the risks so be careful before you decide to change any existing investments.
4) Take advantage of opportunities
Luckily, amid all the risk surrounding your investment plan, there are plenty of ways you can take advantage of the rules to give your retirement plan a lift. A great example is the ability for retired people to continue to make small contributions and receive tax relief even if they are already taking their pension. It’s a great uplift and a bene t that very few people take advantage of. The complexity of our tax and product system throws people off.
5) If in doubt take advice
For most people, it makes them money. Unless you’re already very sure about what you want to do with your pension, taking advice could be the soundest nancial decision you’ll ever make. A recent survey by the International Longevity Centre UK (ILC-UK), highlighted that people who take financial advice are on average £40,000 better off.