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Financial planning for your retirement – making the most of your money


Choosing when to retire is one of the most important decisions you will make. You have to consider the kind of lifestyle you want during your retirement. Once you have a clear idea of how you intend to spend your golden years, you need to figure out how you can have an income that will provide for your future.

First of all, you need to assess your pension pot. This will be the total of all the contributions you and your employers have paid toward your retirement. It can also include any growth from investments, if your pension contributions were set up that way.

You should receive an annual statement from each of your pension providers, this can either be by post or online via a website. If you have changed jobs multiple times, you may have many different pension pots and you will need to contact each fund separately for a statement.

This doesn’t include your state pension, that will come to you via the government, based on your national insurance contributions.

You can withdraw money from the pension pot when you reach the minimum age for retirement, usually around 55 years old. This can be arranged earlier if you are forced to retire due to poor health.

Each of your pension pots can be used differently. They will all have their own rules, fees, risks and benefits for you to consider. At some point you will need to get some sound advice from a regulated independent financial adviser, so that you can carefully consider the options.

You may decide to do nothing, leave the money invested in a scheme, or withdraw some of your pension pot as a cash lump sum. You can buy an annuity, invest onto the stock market, drawdown or mix any of these options to suit your needs.

You may decide to withdraw a lump sum, take the whole amount and close the pension pot or make several withdrawals when you need it. There may be fees, tax charges or a limit to the number of times you can withdrawal.

Annuities convert your pension pot into an annual pension, giving you a guaranteed income for life or over a specific period of time. You have the right to buy an annuity from any provider you like. Some providers need a minimum amount to purchase their annuity, and the rates can fluctuate with the stock market or the economy.

Income drawdown schemes transfer some or all of the money from your pot into an investment on the stock market. You can take an income from the investment whenever you want to, and with no restrictions on the amount or how often. However, it isn’t guaranteed and there may be fees. It is also completely tied to the ebb and flow of the stock market.

There’s a lot to consider, so talk to a regulated independent financial adviser and get the right advice.

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