charlotte James IFA logo

Planning for your retirement


We all look forward to the day we give up work or the need to work so we can choose to spend more time doing the activities we enjoy.

For most of us the provision we have made while working will determine when we will be financially able to do this. Planning for your retirement when you don't have an employer scheme to join is about accumulating as much wealth as possible to see you through the golden years.

Personal pensions, individual savings accounts (ISA's), buy to let properties, the value of your business are all drawn upon when your time has come to generate your income.

Why use a pension?

Pensions provide a structured approach so you are able to save on a regular monthly basis, with the benefit of tax relief on contributions is the main reason why this it's the strategy for most of us.

Other benefits worthy of mention on personal pension schemes is having the payment increase annually and protecting your pension should you get ill or have an accident and cannot work. This will ensure that payments will continue into your plan building up your fund value until you return to work or retire.

The first stage is therefore to accumulate as much as possible within your pension fund. What you put in and the investment choices you make will directly affect the income you receive, the earlier you start saving into your pension the better.

The second stage is taking your income. You will need to choose how you will take your pension income, to ensure you and any dependent get the income they need but you need to take into account that your pension income is taxable.

Pensions V. ISA's

Using an Individual Savings Account (ISA) could offer an additional or even alternative solution, depending on your situation. The one main difference between a pension and an ISA is tax. Your pension payments qualify for tax rebates on the way in, while the income paid out later is taxable. With an ISA, the money you contribute has paid tax before it goes in but then the withdrawals you make are tax free. It is also useful to know that if you’re over 65, your pension income counts towards your tax-free allowance, while your ISA withdrawals do not.