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Building a retirement plan #ForYou
Retirement is a significant life milestone, marking the transition from earning a regular income to relying on savings, pensions, and investments. By partnering with a Financial Adviser that takes the time to understand your aims and objectives in retirement, you can rest assured that we will maximise the legacy that you leave behind for your loved ones, while enjoying your retirement years to the fullest.
Together, we will help you to navigate the intricacies of the tax system, to optimise your potential wealth…But how will we do it?
It all starts with understanding your income sources...
It’s essential to identify and understand your potential income streams. These are the available funds that you will be using to both maintain the lifestyle you wish and to accumulate additional wealth to be used in later life and for inheritance purposes.
State Pension: The State Pension is available to those who have made sufficient National Insurance contributions during their working life and have reached State Pension age, currently 66 rising to 67 in 2028. The amount you will get can vary based on your contribution history and retirement age. Currently, the full new State Pension is £203.85 per week for tax years 2023/2024.
Workplace Pensions: A Workplace Pension is a way of saving for retirement which is arranged by your employer. A percentage of your pay is put into the pension scheme every payday and more often than not you are automatically enrolled into a workplace pension when you begin employment. There are exceptions to this which you can discuss with your Financial Adviser. Workplace pension schemes are regulated by The Pensions Regulator.
Personal Savings: There are a number of different savings vehicles including ISAs (Individual Savings Accounts), savings accounts, and other investment accounts.
Property Rental Income: If you own a second property, rental income can be a source of retirement funds.
Utilise Tax-Efficient Savings Vehicles
The UK's tax landscape is intricate, with regulations and allowances subject to change. A Financial Adviser can provide tailored guidance, ensuring your retirement income plan remains tax-efficient amidst evolving regulations.
Although in the majority of instances, a pension will be primary source of retirement income, there are a number of other options available to you to save for your retirement. Of course, if you would like to speak to someone from the Lync Wealth team to explain some of the following concepts, or to discuss your retirement goals, you can get in touch with us here.
ISAs (Individual Savings Accounts)
Cash ISAs: Offer tax-free interest on savings.
Stocks & Shares ISAs: Allow you to invest in a range of assets without incurring Capital Gains Tax (CGT) or further income tax on dividends.
Lifetime ISA: designed specifically for long term savings, the Government will add a 25% bonus to your savings up to a maximum of £1,000 per year. You are able to add up to £4,000 into a Lifetime ISA per year. This is included in your annual ISA limit which is £20,000 for the 2023/24 tax year. Lifetime ISAs are designed for long-term savings and thus come with restrictions. You must be between 18 and 40 to open a lifetime ISA. You can only withdraw money without penalty if you reach retirement age, you are purchasing your first home or you are diagnosed with a life limiting illness.
Plan Withdrawals Strategically
When drawing from your retirement funds, consider:
Tax-Free Lump Sum: this is usually the first 25% of your pension pot which can be withdrawn tax-free typically the maximum is £268,275.
Avoiding Higher Rate Tax Bands: Spreading withdrawals across multiple tax years can prevent pushing you into a higher tax bracket.
Further considerations and options in retirement
Annuities and Drawdown
Annuities provide a guaranteed income for life. While they offer security, they might not be the most tax-efficient option for everyone.
Drawdowns allow you to keep your pension invested while drawing an income. With careful planning, you can manage withdrawals to minimise tax liabilities. It is important to consult with a Financial Adviser who are the best people to talk you through the most efficient withdrawal strategies for your specific circumstances. Investments come with risk and the value of your investment (and any income from them) can go down as well as up and you may not get back the full amount that you invested.
The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.
The Financial Conduct Authority does not regulate estate planning, tax planning.
Seek Professional Advice
Lync Wealth have vast experience for all life stages of the advice process. We offer a personalised service which we tailor to your needs and your goals.
When you are ready to discuss your retirement goals, we are here to help you achieve them.
Lync Wealth Management
The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.
The Financial Conduct Authority does not regulate estate planning, tax planning.
Want to hear more?
It's important to acknowledge that there's no singular path to growing your wealth and that it depends on your financial goals, your risk appetite, affordability and timeline. Reach out to the Lync Wealth Team today, and let us help you build a strategic financial plan that unleashes the potential of your money #ForYou."
This blog is for your general information purposes only and does not constitute investment advice. It is not an offer to purchase or sell any particular asset and it does not contain all of the information which an investor may require in order to make an investment decision. Please obtain professional advice before entering into any new arrangement. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of its content.