Having decided when you want to retire, you should next look at how you’ll want to live.
Think of it as a permanent holiday, perhaps?
A rule of thumb might be to aim for an income of a half to two-thirds of your current one – adjusted for inflation and set to keep pace with it in retirement.
Consider what you’ll be doing. Will you be taking more holidays or pursuing an expensive hobby? The chances are, you’ll want to carry on living at the same standard as you do now.
If you’re aged over 55 and looking to take your pension benefits, you now have a far greater choice thanks to the government’s pension reforms.
Previously, many people would have to buy an annuity with their pension to receive an income. Now, however, there are a number of ways to get an income from your pension fund.
With greater choice comes increased complexity. However, the increased options available could lead to many people making the wrong decisions and paying unnecessary tax, making professional financial advice when considering accessing your pension fund, all the more important.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.