The long-standing traditional manner of providing ones income in retirement has been ‘arguably’ blown apart with the new pension rules. Retired clients could be wasting up to £16,100 of tax free allowances each year by taking their retirement income solely from their pension. And at the same time they could be reducing how much of their wealth that could be left to their loved ones on death.
The challenge is to question and possibly undo a lifetime’s worth of hardwired retirement savings habits. And the key to achieving this is to demonstrate that an alternative retirement income strategy using a range of tax wrappers can provide a sustainable source of spendable income while securing the best possible legacy on death from unused funds.
To achieve this will require:
- Breaking the instinctive link between retirement income and pensions – for over 55s it’s just like any other savings pot.
- Avoiding paying unnecessary tax by maximising available allowances – take income for taxable sources within the available allowances.
- This isn’t a one off retirement income decision – to get the balance right demands an annual review of income needs.
- Preserve tax privileged savings for longest – less tax not only means funds will generally last longer but there’s also likely to be more to leave behind.
An adviser who can provide all of this guidance will offer an extremely valuable advice proposition to their clients.
Optimum Independent Financial Advisers can offer this advice and we work with our clients to build long term family relationships as a result.