Draw 25% of your private pension as a tax-free lump sum.
01
Take an annual pension income up to the tax-free allowance limit of £12,570.
02
Make larger contributions to your pension pot to receive tax relief from the government.
03
Withdraw from tax-efficient ISAs before tapping into other accounts.
04
Defer your state pension for a 1% government boost to your pension every nine weeks.
05
5 ways to Become tax efficient
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Navigating retirement taxes:
a beginner’s guide
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What is a cash deposit platform?
Glossary
The age at which an individual is eligible to start receiving their State Pension, currently set at 66 but set to increase to 67 and 68 in the future.
State pension age
A regular payment made by the UK government to people who reach State Pension age, based on their National Insurance contributions.
State pension
A pension plan that an individual sets up themselves, usually through a pension provider or employer, to supplement their State Pension.
Private pension
A financial product that provides a guaranteed income for life in exchange for a lump sum investment.
Annuity
A retirement income option that allows individuals to withdraw money from their pension savings over time, rather than buying an annuity.
Drawdown
A one-time payment of a large amount of money, often taken from a pension fund.
Lump sum
The total amount of money that an individual has saved in their pension plan.
Pension pot
Regular payments made by an individual or their employer into their pension plan.
Pension contributions
A workplace pension scheme where the retirement benefits are based on the employee's salary and length of service.
Defined benefit pension
A limit on the total value of pension benefits an individual can receive without facing additional tax charges.
Lifetime allowance
A 25% portion of a pension that can be taken as a tax-free lump sum when an individual reaches retirement age.
Tax-free lump sum
A limit on the amount of money that can be contributed to a pension scheme each year without facing additional tax charges.
Annual allowance
A pension that an individual has accrued but has not yet started receiving.
Deferred pension
Retirement Glossary
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Top strategies for earning more interest on your savings
Cash is a low-risk asset, ensuring peace of mind and a secure future. Ideally you should hold about 3-6 months’ worth of expenses in cash to cover emergencies.
Show your cash more interest
Compound interest is the interest earned not only on the principal amount you have saved but also on the accumulated interest. This means that the longer your money is invested, the more interest it can earn. In simple terms, the earlier you start saving for retirement, the more time your money has to grow.
It makes it easy to react to new interest rates on the market, grow your savings, and protect your wealth.
Compound interest
Cash deposit platforms
Created by Financial Adviser, Bengen, this popular retirement rule proposes you withdraw 4% of your portfolio’s value every year to establish a comfortable income. For example, if you have £1 million saved, you can comfortably withdraw £40,000 in the first year.
This approach should be used as a guide and may not be suitable for everyone.
THE 4% rule
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A deeper dive into taking your pension money as income
The payments received are taxed but you can take 25% of your pension as a tax-free lump sum.
An annuity is suitable for retirees who want stability and predictability when it comes to how much money they’ll receive each month.
An annuity is a financial product you receive by swapping a lump sum from your private pension.
It converts your pension in return for a steady, monthly income stream. This can be for specific period or for the rest of your life.
Drawdown is a flexible way of receiving income for those who want more control and wish to keep some of their pension invested.
After taking 25% tax-free, this option allows you to take your money as and when you need it. You can adjust your income according to changing financial needs or market conditions.
Unlike annuities, drawdown does not provide a guaranteed income for life, which means you bear the investment risk and need to manage your savings effectively.
Annuity
Drawdown
TIME
Birth
Working life
Stop full-time work
After work
Death
De-accumulation phase
Peak lifetime savings
Accumulation phase
An overwiew of your savings roadmap
Provides a regular income
Annuity provider
You
Lump sum
The basic annuity model
When it comes to managing your retirement income, there are two main options to consider: annuity and drawdown. Each has its own advantages to explore:
Your money, your way
There are three main types of pension to take advantage of in the UK.
Maximise your pensions
Mastering the
art of wealth management
04
Companies in the UK are required to enrol their employees to a workplace pension scheme.
Both you and your employer make contributions to the pension.
By law, an 8% minimum of your earnings must be contributed, of which your employer pays at least 3%.
Managed by the government and designed to provide a safety net for those who have contributed to the economy throughout their working lives.
The amount of the pension you receive is based on your National Insurance contributions and retirement age.
The minimum age to claim a state pension is now 66. But the threshold is likely to keep rising as we all continue to live longer.
There are different types of private pensions available - stakeholder, personal, and self-invested personal pensions (SIPPs).
A personal pension (also known as a defined contribution pension) is set up yourself, outside any workplace scheme. You choose the provider and arrange for your own contributions to be invested.
A stakeholder pension is a type of defined contribution that must meet strict government rules.
SIPPs are self-managed with a broader investment choice, potentially leading to higher returns. However, it requires you to manage your own pension.
Private pension
Workplace pension
State pension
Think about how you want to live in retirement. Consider your ideal daily routine including hobbies and travel. Set some lifestyle aspirations.
Establish your preferred retirement lifestyle.
Take time to forecast various upcoming costs, including mortgage payments, travel, hobbies, and potential life events. By accounting for these in advance, you can better position yourself for peace of mind.
Estimate your future expenses (and some).
Consider your lifestyle, expected future expenses, and any potential changes that may occur over time. You can then develop a comprehensive plan that aligns with your goals and helps you achieve long-term financial security.
Decide how much you’ll need to maintain the standard of living you want.
Take stock of your existing assets,
income, and expenses.
Begin by accumulating the market value of all physical and intangible assets you own. Next, consider your current salary and additional income before subtracting bills, debts, daily expenses, and mortgage payments.
Figure out how much you can invest
for the long-term.
Now you can evaluate your capacity to increase pension contributions or allocate funds to alternative investment options, such as ISAs or savings accounts. Adopting a long-term perspective will put you in good stead for a thriving retirement.
How much wealth
do I have?
How much do I need to save for retirement?
Start by asking yourself these questions:
Understanding your financial affairs is the first step towards a prosperous retirement. It helps you set realistic goals, recognise insufficiencies, and pre-empt unforeseen expenditures.
Frank Eberhart
The goal of retirement is to live off your assets – not on them.”
“
Assessing your financial position
03
There are many things to consider before settling into a retirement lifestyle. Take the quiz to determine your readiness for the anticipated event, and what steps to take next.
Is your plan up to par?
02
One in six over-55s have no pension savings yet.
55-64 year olds have less than £100,000 in their long-term savings.
10 %
20 %
35 %
42 %
48 %
52 %
56 %
60 %
69 %
people approaching retirement are at risk of not having an ‘adequate’ pension income.
Five million
Many high-net-worth individuals in the UK underestimate how much money they will want in retirement.
01
The reality of retirement planning
Contents
Retirement – the pinnacle of your life's work – ought to be relished. Yet a surprising number of people approach this defining moment without adequate preparations. We want this to change.
Malcolm X
The future belongs
to those who prepare for it today. ”
“
A playbook for planning your golden years
The pathway to prosperity
Unlock the retirement life you want
01
The reality of retirement planning
02
Is your plan up to par?
03
Assessing your financial position
04
Mastering the art of wealth management
05
Retirement glossary
This means that the longer the money is invested, the more interest it can earn. In simple terms, the earlier you start saving, the more time your money has to grow.
A cash deposit platform simplifies the process of building wealth for your future. It offers a convenient web-based collection of savings accounts from various banks and terms, eliminating the need to open multiple accounts. With this platform, you can easily respond to interest rate changes, grow your retirement savings, and safeguard your wealth.
Defined contribution pension
A workplace pension scheme where the retirement benefits are based on the contributions made and the performance of the investments made with those contributions.
TAKE THE QUIZ
Private pension
Workplace pension
State pension
Compound interest is the interest earned not only on the principal amount you have saved but also on the accumulated interest.
This means that the longer the money is invested, the more interest it can earn. In simple terms, the earlier you start saving, the more time your money has to grow.
This means that the longer the money is invested, the more interest it can earn. In simple terms, the earlier you start saving, the more time your money has to grow.
It makes it easy to react to new interest rates on the market, grow your savings, and protect your wealth.
A cash deposit platform is a web-based collection of savings accounts, exclusive only to its clients. It removes the hassle of opening multiple accounts, allowing you to pick and choose from a range of different banks and terms – in one platform.
This makes it easy to react to new interest rates on the market, grow your savings, and protect your wealth.
Compound interest
Cash deposit platforms
A cash deposit platform simplifies the process of building wealth for your future. It offers a convenient web-based collection of savings accounts from various banks and terms, eliminating the need to open multiple accounts. With this platform, you can easily respond to interest rate changes, grow your retirement savings, and safeguard your wealth.
CASH DEPOSIT PLATFORMS
Compound interest is the interest earned not only on the principal amount you have saved but also on the accumulated interest. This means that the longer your money is invested, the more interest it can earn. In simple terms, the earlier you start saving for retirement, the more time your money has to grow.
COMPOUND INTEREST
Cash is a low-risk asset, ensuring peace of mind and a secure future. Ideally you should hold about 3-6 months' worth of expenses in cash to cover emergencies.
3-6
months'
Show your cash more interest
The remaining funds in your pension stay invested and saved, so your money has more opportunity to grow over time.
3-6
months'
This guide is not advice. If you would like to get advice on retirement planning, consider speaking to a Financial Adviser.
This guide is not advice. If you would like to get advice on retirement planning, consider speaking to a Financial Adviser.
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