The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.
In recent years pensions have never been away from the media spotlight for long. We constantly hear of doom and gloom in relation to pensions. The fact is that using a pension to save for your future is still the best way to underpin your financial security during retirement. It's also true that the earlier you are able to start the savings process the better. If you have already started saving for your retirement it's essential to make sure your money is being invested in the right place, maximising your exposure to growth but at a level of risk that you are comfortable with. As part of our planning we will review all existing arrangements to see how they are performing, where they are invested and the level of risk attached. We will then help you understand the options open to you, to achieve your expectations at retirement.
The type of pension that is appropriate will depend on the individual; more flexible arrangements may suit the more adventurous with Self Invested Personal Pensions providing access to a range of tangible investments such as commercial property purchases.
One way to release the savings you have built up in your pension fund is by purchasing an Annuity. The Annuity will then provide you with an income throughout your retirement. This purchase is a 'one off' transaction and it is therefore crucial to buy the right one. Too often we see clients that buy the Annuity from the firm they have saved the pension fund through without considering alternative providers. The Annuity rate, which determines the level of regular income you will receive, will depend on a number of circumstances including your age, health and whether you smoke and each provider will take their own view on these factors, so it is important to get the one that is right for you.
More and more people are choosing not just to buy an annuity but to look at alternative arrangements such as Flexible or Capped Drawdown pensions that allow you to keep the funds invested whilst still taking an income. These types of scheme may also provide the ability to release more of the funds from the pension earlier dependent on your circumstances.
With the widening range of choices it's important to understand what your options are, and the risks involved, in order to make the right choice with your retirement savings.
Taking pension benefits early, including taking tax free cash can reduce the income available in retirement, and is therefore not suitable for everyone.
The value of investments and pensions, and the income they produce, can fall as well as rise. You may get back less than you invested.
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