Approaching retirement
Time to consolidate your plans
As you near retirement, you’ll be faced with another set of decisions. Again it’s time to take stock and, if you need to, put any final plans in place.
Approaching retirement is the time to take another review of your retirement plans and make sure you’re still on course. By now you probably have a clear picture of how you want to spend your retirement years.
You still have some decisions to make. Importantly, you have to decide how you’ll use your accumulated pension fund.
You have a number of choices about what to do with your maturing pension fund:
- Use your entire fund to buy an annuity
- Take up to 25% of your fund as tax-free cash and use the rest to buy a smaller annuity
- Buy an annuity in stages rather than all at once - useful if you continue to work part-time
- If you have a large fund you could transfer it all to an income drawdown plan. This would let you take some income while the fund remains invested
If you opt to take any tax-free cash, you have to do this before you reach age 75.
You may have to pay income tax on the payments you get from your annuity or income drawdown plan – this depends on your total income. Remember, you can buy your annuity from any pension provider, so shop around to get the best deal.
In the run up to retirement, you should aim to get the most from your non-pension savings and investments as well. But remember, you don’t want to take short term risky investments or you could face a dwindling retirement pot just before you retire.
Investments
There is generally a choice of fixed term investment products available at any given time. These give you some security by guaranteeing a full or partial capital return provided the investment is held until the end of the fixed term.
Savings
Cash based savings accounts provide the safest home for your short term retirement savings. Again there are generally some fixed returns available if you can lock your money away for an agreed term.
Tax efficient investments and savings
Don’t forget to make maximum use of your ISA allowance if you can.
With so many important decisions to make, it’s best to have a professional working for you.
If you have a sizeable pension fund, you might be considering income drawdown or wondering how you can access the best annuity rates.
We can help you figure out the best deals for you. Even if your pension wasn’t arranged through NatWest, we can still give you the confidential and personal service you need.
Inheritance planning
It’s time to make sure you don’t leave your wealth to the taxman.
Get in touch
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Glossary
Check out those tricky retirement terms in our glossary.