At the point of retirement

If you are right at the point of retirement, you are about to take a number of big decisions that will have a huge impact on the quality of the rest of your life – so it is worth taking the time to think them through properly.

Here are some of the things that worth thinking about:

  • Do you really want to stop work completely?  What options are there to continue work and earn an income, maybe on a different basis?  (Your employer is obliged to consider a request not to retire yet, but is not obliged to grant it).  Could you take on a different job completely as part of your transition?
  • Do you really want to trigger all of your pensions now?  If you have the option to delay your pension you might be able to take advantage of the pensions turbocharger effect that increases your pension by more than you might think?
  • If you are planning to retire early, take care that the pensions turbocharger hasn’t worked in reverse and slashed the amount of your pension.
  • If your pension scheme offers tax-free cash, don’t accept it automatically just because it is tax-free.  Pensions are much more expensive than they used to be, so it may be better to keep your money in pension form rather than cash – even if the cash is tax-free.
  • If you have your own pension, think about using your Open Market Option, which is your right to shop around for the best possible pension rates from your pension fund.  You can sometimes get a better rate from the open market, especially if you are in ill-health and can obtain an “impaired life annuity” that reflects your shorter expected life span.
  • If you have your own pension, look at the various types of annuity product that exist.  These could be useful in a low interest-rate world where standard annuities become hugely expensive.  By taking an alternative product you may be able to defer the purchase of a long-term annuity to a later date.

Overall, the key point is to avoid drifting into retirement and taking all the default options that present themselves.  If you have a pension gap, taking the time to think carefully over the decisions that will have to make soon can make a significant difference to the size of your gap.

The book covers all the above in much more detail: also look out for relevant articles as they are published and think about registering and downloading our action plan.

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