If you are getting close to retirement, don’t assume your pension company will make all the arrangements – they will wait for you to instruct them. So don’t leave it to the last minute, start planning in advance because decisions you make now can make a big difference to your future income.
1 - Annuities - don’t just accept the retirement income your pension company offers. They may have been a safe home while you were saving but often, rather like insurance renewal, you can get a much better deal by shopping around. At this point you need to think about your family situation. If you die your pension will cease unless you have chosen to add beneficiaries. Additional benefits like this reduce the overall pension you receive – do not assume they are included.
2 - Enhanced Annuities - if you are a smoker, have a medical condition or lifestyle factors such as being overweight you may be eligible for a type of annuity offered by some specialist companies which will give you access to better rates
3 - Forgotten Pensions - if you have moved jobs several times it may be that you have small pots you are entitled to but have no paper trail to show for it. The Pensions Tracing Service can help you locate these lost pensions.
4 - Make a plan - consider all the sources of income you will have. You will have to decide if you have enough to maintain your desired lifestyle. This is where careful planning with the help of a professional can help you make decisions about what kind of holidays you can afford and whether you can indeed help out your family financially. You may even be able to afford to retire earlier than you thought.
5 - Don’t forget the Tax - in retirement your income and capital gains are still taxable, with careful planning you can minimise this. Now is a good time to start looking at inheritance tax too, it may be that you can afford to start making gifts and take other measures to make sure your children aren’t left with a hefty bill. .
6 - Do it now! - This one is for free! If you are approaching retirement, start making a plan. Taking good advice in this situation can save you a lot of money, which is crucial when you no longer have the capacity to earn money.