Retirement Solutions
Retirement Solutions
After working hard all your life to build a pension pot, you want to make sure that you are able to retire using your pension income.
You do not even have to stop working to get this income, so you can start taking your pension income while you continue to work.
What Are Your Retirement Options?
Your main three retirement solutions options to convert your pension pot into income are:
>> Annuity
>> Drawdown
>> Take it all out as a lump sum
With all three options, you can take up to 25% of the value of your pension pot as a tax free lump sum.
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Annuity
This is a contract between you and the insurance company, you give the insurance company your pension pot in return for a guaranteed income for the rest of your life. You can, if you wish, take up to 25% of the value of your pension pot as a tax-free lump sum. You can add options to your Annuity like spouse’s pension, indexation, and guaranteed income period. If you and spouse were to die, the Annuity ends too and there is nothing to be passed down.
Your Retirement Goals
Choosing a suitable retirement solution will entirely depend on your individual circumstances and your goals once you retire. You would need to consider your partner or family if you have one and how they tie into your pension. You would also need to consider your retirement living arrangement and lifestyle as that too will affect which retirement option you decide to go for.
Health and Life expectancy
Your health and your life expectancy will affect which retirement option will suit you better. If you have a family, you will want to consider what happens to them when you pass and whether you want to leave them an inheritance.
Your current pension savings
Your pension savings determine which option you should go for. If you have several pension pots, you need to consider whether their overall value of them is sufficient to provide you with an income for the rest of your life or not.
Your other income sources
Other sources of income will affect which retirement option is most suitable for you.
This includes assets you own such as Buy-to-Let properties that generate rental income
How Much Money Will I Get From My Pension?
There is no straightforward answer to this question
Because it will depend on which pension scheme you have, how many years you contributed into the pension scheme and how much, and how much you contributed towards your state pension. You need to speak to a financial advisor to assess your existing pension plans.
What Can I Do With My Pension When I Retire?
Drawdown
This is also known as FADD (Flexi-Access Draw Down). If you are looking for more flexibility and control, then you can use this option. You still can take up to 25% of your pension fund as a tax-free lump sum at the outset. You can decide how much income you want to take and how frequent. The value of your retirement pot could go down as well as up because it will continue to be invested. The money can be passed on until the whole pot of money is used up.
Lump sums
You take the first 25% of the value of your pension pot as a tax-free lump sum. You can take the rest of the pension pot in several lump sums. The pension pot will continue to be invested until you use it all up. These lump sums are subject to income tax.
Retirement solutions options are not one-size fits all, there are so many variables and different factors that will affect the decision on which retirement option would suit you better. It could be a combination of all three options, or a couple of them depending on your circumstances and the rest of your financial picture. For example, you can buy an Annuity to generate a guaranteed income to cover your essentials such as day-to-day expenditures, and then you can put the rest of your pension pot into a Drawdown and take a lump sum payment to cover holidays and luxuries during retirement.
The Pension Hub Service
The free service from The Pension Hub connects you with FCA Regulated Pension Advisor and you qualify for a FREE pension advice consultation.
Defined Contribution Pension Plans
We'll help you get a DC Pension Plan Set Up or help you switch to a DC Pension Plan
Defined Benefit Pension Plans
We’ll help with your current DB Pension Plan or help you switch to a DC Pension Plan
