WHEN YOU’RE NOT READY TO CONVERT YOUR PENSION FUND INTO RETIREMENT INCOME
If you decide that you’re not ready to convert your pension fund into retirement income by buying a lifetime annuity, but you do need funds, you have a few options. These are often known as ‘income drawdown options’.
If you have a partner or other dependants, such as children, you might want to think about additional retirement income protection. With income protection, your named dependants could get some or all of your retirement income if you die, either as regular payments over a period of time or as a one-off lump sum.
VALUABLE OPTIONS THAT ALLOW YOU TO TAILOR THE INCOME YOU NEED
In the UK, there are basically two types of annuity:
– pension annuities (compulsory purchase)
– purchased life annuities (voluntary purchase)
AN IMPORTANT ONE-OFF DECISION THAT HAS LONG-TERM CONSEQUENCES IF YOU GET IT WRONG
If you save through a private personal pension, when you approach retirement age you’ll have to decide what to do with the pension fund you have built up. If applicable to you, one option is to buy an annuity. It’s important to find an annuity that suits you and provides the best deal because, after your property, an annuity is probably the biggest purchase you will ever make.
THOUSANDS OF PENSION SAVERS COULD BE IMPACTED UNLESS THEY ACT SWIFTLY
If you are making high levels of pension contributions you will need to obtain professional financial advice to make sure that you know whether you will be affected by the impending new lifetime allowance (LTA) limit changes. Thousands of pension savers could be impacted by the forthcoming changes unless they act swiftly.
It may be tempting to say, ‘But retirement is a long way off’, yet it’s never too early to start investing in order to protect your future. To afford the lifestyle you want when you retire, you need to do something about it today. You now have a much greater choice when it comes to how and when to take retirement benefits from pensions since the pension simplification rules were introduced.
A REGULAR PAYMENT FROM THE GOVERNMENT THAT YOU RECEIVE WHEN YOU REACH STATE PENSION AGE
The basic State Pension is a regular payment from the Government that you receive when you reach State Pension age. To receive it you must have paid or been credited with National Insurance contributions.
Saving for your retirement may not seem important when you’re starting out. But the sooner you start saving for your retirement the more secure your future will be.
HAVE YOU GIVEN FULL CONSIDERATION TO YOUR LONG-TERM PENSION INVESTMENT STRATEGY?
Retirement planning involves thinking about your plans for the future now – that means investing your money with the aim of maximising its value ready for when you retire. Careful financial planning, the right mix of assets and starting sooner rather than later could all help lead to the retirement you are looking for. Many years ago the traditional view of saving for retirement was to simply put your money into a pension, with few decisions to make in the run-up to your retirement date and no choice over how the pension was taken.
When it comes to taking investment risk to secure a higher return, those aged 55 and over are most likely to be taking the lead with Stocks & Shares Individual Savings Accounts (ISAs), according to research from Standard Life (08 April 2013). Over one in ten (11 per cent) of 55 and overs invest in the stock market via their ISA, compared to just 7 per cent of 35 to 44-year-olds.