Retirement Planning

Retirement can last for 30 years or more. Estimating how long you will be retired is difficult however, a good place to start is considering when you are going to retire or semi-retire and then working out how much income you will need in retirement. Explore where your income in retirement may come from. This will help you build a picture for retirement.

Pension Options

There are numerous options available to you when accessing your pension. Our retiring planning page gives details on the options. A lot of the uncertainty can be taken away by ensuring you have a retirement plan in place.

Available options include:

  • Leave your pension pot untouched
  • Buy a guarenteed income for life
  • Take a flexible retirement
  • Take small cash sums
  • Phased retirement
  • Take the whole cash pot

There are many other factors that are important when you’re considering your retirement. Understanding what you have got and what you will need are key, however understanding how tax, inflation and risk play a part are also extremely important. This is were getting financial advice can be useful to help you understand the advantages and disadvantages of all the options available to you.

    Leave your pension pot untouched

    • Your money could grow
    • You can continue to make payments
    • Pension are normally outside of your estate for IHT
    • Pass on to relatives as part of their inheritance

    Buy a guaranteed income for life – An annuity

    • Your income can be guaranteed
    • Your retirement income is stable
    • You can choose options so your income increases
    • You are locked into an annuity

    Take a Flexible retirement income – Drawdown

    • Take as much income as you need from your pension
    • Fill gaps in your earnings
    • Take a combination of taxable and tax-free income
    • Risk of you pension running out

    Take small cash sums – Phased Retirement

    • Don’t take a regular income
    • Access lump sums as and when you need them
    • Mix taxable and tax-free income
    • Risk of your pension running out

    Mix your options

    • Combine options to match your needs
    • Take a regular income and lump sums
    • Purchase an annuity later in retirement
    • This can make decisions complex

    Take the whole cash pot

    • 25% will be tax-free
    • 75% taxable at your marginal rate
    • There are likely to be tax implications
    • The funds will be part of your estate for IHT

    None of the information contained in this website constitutes financial or other professional advice in any way. If you require additional information, you should contact one of our qualified advisers. There are many facets to retirement planning and we recommend you seek advice before making decisions. The above lists are only some of the options and there are possible tax implications.

    Currently you can pay up to £40,000 a year (or 100% of your salary) into a pension scheme and get tax relief on your contributions. This is known as your Annual Allowance. However, if you start to take money from a defined contribution pension, the amount you can pay into a pension and still get tax relief reduces. This is known as the Money Purchase Annual Allowance or MPAA. The MPAA only applies to contributions to defined contribution pensions and not defined benefit pension schemes. The MPAA is £4,000 for the 2020/21 tax year.