Tips for retirement planning.
What is your plan for when the "salary tap" stops?
Retirement! Some of us dread it, others can’t wait. One thing’s for sure - having enough money to fund your retirement lifestyle is key.
But most people are unsure about a) how much capital they need in their ‘retirement pot’ or b) worried about whether they have enough time to save without compromising their existing lifestyle. As a result, many simply do nothing and ‘hope’ that everything will be ok.
At Schofield, we take retirement planning seriously. We’ve helped lots of people like you to effectively plan for retirement so you can make the most of your money and live the life you want. Here are a few of our tips for a well-funded and happy retirement.
1) Start as soon as possible
It’s never too early to start saving into a pension. Take advantage of your employer’s scheme as most also contribute into your pension, doubling up your investment. If you’re concerned that your existing pension scheme isn’t sufficient, why not think about setting up a private pension? Having more money in pensions increases your options for a well-financed retirement. So, whether you’re in your 20s and just starting your professional career or in your 40s and dreaming of retirement in your 50s, make sure that you’re saving as much as you can into a pension.
2) Save in a tax efficient way
Did you know that all retirement savings plans are not the same? Although pension plans are tax free, a lot of savings accounts have terrible interest rates and are subject to tax. This can drastically eat into the amount you have saved, especially if you are a higher rate taxpayer. Many people don’t know that we all have an annual tax-free allowance so we can save money each year without paying any tax on the interest at all! That’s why investing money into a tax-free ISA (Individual Savings Account) makes sense. Be warned, there are lots of different types of ISA and quite a few rules and dates to remember so it’s always best to get some professional advice.
3) Timing matters
Did you know that there’s a right time and a wrong time to withdraw pension funds? Many people don’t realise that taking money from their pension can result in a huge tax bill. Although the first 25% is tax free, the rest isn’t which could mean a major bill for upper rate taxpayers. Sometimes it’s better to look at taking money from other investments – e.g. ISAs instead. It’s always worth taking advice from a pension expert BEFORE you withdraw anything from your pension.
4) Don’t forget IHT planning.
Many of us save carefully throughout our lives and hope to pass on at least some of our wealth to our children or grandchildren. But all too often, people don’t take advantage of Inheritance Tax (IHT) Planning and lots of their hard earned money ends up going to the taxman. Did you know that your children could have to pay a tax bill of up to 40% on your estate? At Schofield, we encourage our clients to think carefully about the future and advise them about tax efficient ways to protect their wealth and pass as much money as possible on to future generations.
Come and talk to the experts at Schofield. We can review your existing pension and savings plans and tell you about ISAs and IHT planning. We’ll check that you’re on track to meet your retirement goals and let you know if you need to take further action. Call us now on 01423 368000 or email us on firstname.lastname@example.org