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If you are struggling to understand when you can afford to retire, there is a free service where you can get advice.
Do you understand your pension, when you can start drawing it down and what the pros and cons of doing that might be?
Many people have chosen to take early retirement since the pandemic hit, but is that based on sound financial thinking? workingwise.co.uk’s research shows many people don’t full understand their pensions and know all the pension pots they might have. Yet understanding your pension is crucial when it comes to planning your future.
If you don’t fully understand all the issues, there is free help avaiable to help you decide on when you might be able to retire. Pension Wise is a government service that offers free, impartial pensions guidance for those in defined contribution pension schemes, as opposed to defined benefit schemes and the state pension.
With a defined contribution pension you build up a pot of money that you can use to provide an income in retirement. Unlike defined benefit schemes, which promise a specific income, the income you might get from a defined contribution scheme depends on factors including the amount you pay in, the fund’s investment performance and the choices you make at retirement.
From the age of 55 (rising to 57 from 2028) and depending on your circumstances, you can choose:
It is a complicated decision and to help with it, you can book a free appointment with Pension Wise to talk through your options and how they will affect your financial situation on retirement. They will go through things you might not have considered such as your plans to continue working, your personal and financial circumstances and leaving money after you die; all the payment options available; tax implications; how to avoid scams and so forth.