Income In Retirement
When you get within 5 years of your anticipated retirement age you'll need to make some decisions. The first issue to consider is the investment of your plan(s) as you near retirement. You will probably want to avoid being too heavily invested into funds which consist mainly of stocks and shares investments because the timing of your retirement could be thrown into disarray if there is a stock market crash immediately before your retirement. This is exactly the type of planning we can help you with.
Once you get to retirement there will be some serious decisions to be made. You will be able to take your benefits in several ways. These include:
- Annuity purchase
- Scheme pension
- Capped drawdown
- Flexible drawdown
- A combination of these arrangements.
Issues to be considered include:
- The size of the fund that is available
- Whether to not tax free cash is required
- Your state of health
- The income requirements of any financial dependents.
- Your dependents state of health.
- Your attitude to risk and the attitude to risk of your dependent.
- What happens in the event of your death
- The effect of inflation
- Other income that you might have.
- Part of your pension can be commuted for tax free cash, usually to a maximum of 25%.
- Plans that pre-date 6 April 2006 could provide entitlement to higher tax free cash.
- The balance of your fund is used to provide you with an income for the remainder of your life.