It’s never too early to start preparing for retirement. Really, it should be something you consider from when you have your very first job. Enrolling in the company’s pension scheme is a vital first step, and from then on it’s important to keep track of your contributions and overall pot so you know whether you’re on track for the retirement you want.
Naturally, the closer you get to retirement age, the more attention you’ll pay to it. You’ll need a clear overview of your current pension savings and an idea of what you’ll do with your pot when you retire – will you opt for an annuity, for example, or is income drawdown your preferred method of securing a retirement income? Are you considering equity release in order to boost your cash reserves, or perhaps you want a retirement interest-only mortgage to repay an existing commitment?
Whatever option you’re considering, having the right support is key. Call us today to speak to a retirement planning specialist in Shrewsbury.
Tax considerations when preparing for retirement
There are a lot of tax considerations to think about in your retirement planning. Such as how to ensure you’re saving in the most tax-efficient manner (ideally through making the most of tax relief in a workplace pension, and/or utilising an ISA), as well as the tax implications of withdrawing your eventual pension income.
You’re free to withdraw 25% of your pension savings as a tax-free lump sum, after which any further withdrawals over your annual income tax allowance (either via drawdown or an annuity) will be taxed at your nominal rate. The exception to this is if you choose to forego the lump sum and instead want to use your pension savings more like a bank account, in which case 75% of each withdrawal will be taxable with the other 25% being tax free.
When it comes to tax considerations for retirement, the best way forward is to seek professional retirement planning advice. Contact us today for retirement planning in Shrewsbury.