Retirement Options Room

It is important to understand your retirement options as there is a vast array of income-bearing products and benefits available.

• Choosing the right retirement plan can have a significant impact on your financial future. Our adviser can help you navigate this complex landscape and create a retirement plan that meets your individual needs and goals.

When creating an income strategy, you have the options of:

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  Taking your pension fund as a lump sum

  The pension freedoms legislation came into force in April 2015 allowing savers to flexibly access their defined
  contribution pension from the age of 55. This means you can withdraw all your pension pot as a cash lump sum however, this would not usually be advisable unless you use the money to buy an annuity, as you may end up with a large unexpected tax taking.

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  Tax-Free Cash

  Normally the first 25% of the total value can be taken as tax-free cash with the remainder being taxed at what is referred to as your marginal rate of tax. Marginal tax means that during the tax year when you cash in your pensions, the amount cashed in after the first 25% is then added to any other taxable income during the same tax year and is taxed as though it was earned income.

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  Guaranteeing income for life

  You can use your pension fund to buy an income that is guaranteed for the rest of your life – this is called an annuity. Most Annuities are fixed and can not be changed once started. The amount that you receive will depend on the annuity being offered. This may not be beneficial if you are looking for flexibility in the way you access your pension funds.

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  Drawing down a flexible income

  Income drawdown is a way of taking an income directly from the money you’ve built up in your pension fund. Allowing you to design how and when you take your money. You can decide the level of income you receive and change this as your circumstances alter.

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  Guaranteeing your income for a fixed period

  You can purchase a fixed-term annuity where the income guaranteed will end after a chosen amount of years with a maturity value. The same options apply as a lifetime annuity except you choose a shorter period of time. This will then give you the option of designing your income options at a future date.

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  Leaving parts of your pension to a later date

  Your circumstances may allow you to defer your retirement, but in the same vain you may not yet have reached your retirement income targets. Retiring later can give you more opportunity to save for your retirement and, as you will be older, you may be entitled to a larger guaranteed lifetime.

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  Using a hybrid of these options

  Using a mix of flexible and guaranteed income in retirement can help you achieve a balance between stability and flexibility in your income streams. This can provide you with a reliable and predictable income while also allowing you to adjust your spending based on changing circumstances or unexpected expenses. Additionally, the combination of these income sources can provide a level of protection against market volatility and other economic uncertainties. A hybrid retirement plan may provide a more comprehensive and flexible approach to retirement planning that helps you achieve your goals and protect your financial future.

Create your own personalised retirement options report to help you understand how these options can work for you.

It will calculate your tax liabilities, provide fixed-term and life annuity quotes and help you understand what your drawdown capabilities are.