One of the most common concerns among those approaching retirement is whether they will have enough money to last them. A new study shows that only 25% of retirees feel very confident they’ve saved enough for retirement.
Rising living costs in the UK, driven by surging food prices and record-high petrol costs, are impacting financial plans for many people. If you’re nearing retirement or have already begun accessing your pension or other retirement savings, you might be concerned about the effect of this cost-of-living crisis on your retirement lifestyle.
While the future is uncertain, you can take steps to bolster your confidence in managing your retirement finances:
Diversify Income Sources: Besides your pension, consider additional income sources like ISAs, investments, and rental income from properties. Don’t forget the State Pension, which, although subject to inflation, can contribute positively to your overall income.
Tax Efficiency: Be mindful of your tax liability in retirement, especially if you’re receiving income from various sources. The timing and amount you withdraw from your pension can significantly affect your tax bill.
Leverage ISAs for Financial Security: ISA savings offer tax efficiency, allowing you to grow investments without tax implications. Using your ISA savings wisely can complement your pension income and prevent overpayment of Income Tax.
Stay Informed About Tax Rules: Tax rules can change, and personal circumstances play a role in your tax treatment. Understand how taxes apply to property, state benefits, and other income sources for financial security.
Monitor Investments for Future Growth: Regularly review your investment portfolio to align it with your financial goals and risk tolerance. Balance risk and potential growth while considering market volatility and inflation challenges.
Remember that pensions are long-term investments typically accessible from age 55 (57 from April 2028 unless protected). Investment values can fluctuate, affecting pension benefits, and interest rates during your benefit withdrawal can also impact your pension income. Tax treatment depends on individual circumstances and is subject to change.
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