Pension lump sums
Taking money from your pension as and when you need it.
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Pension lump sums: explained
Taking pension money early isn’t right for everyone because it could leave you with less to live on in retirement. That’s why it makes sense to talk with an independent and regulated adviser, such as Portafina, first. Important: past performance is not a reliable indicator of future results. Pensions can go down in value as well as up, so you could get back less than you put in.
Be tax-smart with your pension savings
How much pension money you withdraw early can have a big impact on your tax bill and on the size of your future pot.
Let’s take a look at John and Sarah. Both have a £70,000 pension at age 55 and pay the basic rate of tax. They both need £17,500 to cover a financial situation. Sarah takes just her tax-free cash allowance to achieve this. While John decides to take £40,000, putting the balance in his bank account for a rainy day.
How to manage your lump sums
As you can see from the example of John and Sarah, taking pension lump sums can affect your current and future finances. And if John decided to take more lump sums between 55 and 65 his tax bill could be much higher, his pension a lot smaller and the interest he receives from his bank account minimal. The bottom line is: the more you can keep in your pot, the more money you should have for retirement.
That’s why it makes sense to have a chat with an independent and regulated financial adviser before making any final decisions about your pension.
Why staying invested matters
Get started for free
We can check to see if pension lump sums are right for you. Our initial investigation into your pension is free. And in most cases we can continue to provide full advice with no obligation. At any stage you can choose to walk away, better informed and with nothing to pay.
How it works in 3 easy steps
With our no obligation pension check discover if pension lump sums are right for you.