Key points

Check that all your debts, including mortgage, are in order
Decide on whether you’ll buy an annuity immediately or take drawdown
Talk to an IFA before you take any action.

 

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Focusing in your 60s you will be making important decisions about how your pension fund produces cash and income in retirement.
‘These are often lasting decisions that can have a major impact on your finances in later life, so it is the time to seek expert independent financial advice,’ says Bamford.
This is particularly true in the case of annuities, where the options are varied. Essentially annuities are like insurance in reverse – you hand over a large lump sum (your pension pot) to an annuity provider, and they give you regular monthly payments in return for the rest of your life.

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You may qualify for a higher annuity rate if you are a smoker or have an illness. This is called an enhanced annuity.
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Martin Bamford says: ‘Making choices at retirement is about so much more than simply choosing the most competitive annuity rate. It is becoming increasingly popular to use an Unsecured Pension to have greater control over income flexibility in retirement, often phasing the payment of tax-free cash over several years to reduce income tax bills. This is a more complicated strategy than buying an annuity but can really pay off over the longer term.’

 
Mike Morrison says that it’s important to make sure all your debts are in order. Hopefully you will have been able, or are close, to paying off your mortgage, but what about children on your payroll? Are you still supporting them and their young families? These are important issues to discuss with an IFA before you sign up to an annuity.
Additionally, you may be fit and able and want to keep working. This is now possible because the government is set to prohibit employers from forcing their staff to retire at 65. It may be beneficial to keep working for a period and top up your pensions as much as you can.
‘Don’t forget,’ says Morrison, ‘pensions contributions get tax relief, so any immediate contribution gets an uplift from the taxman

 

 

Here at One Stop Finance we can help get your retirement into place. Call us today for a chat about your future planning.

Phone: + 44 (0) 20 8441 2605

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