How To Avoid The Pitfalls When Shopping For A Pension
Have you considered sorting out your pension yet? If not, why not?
Leaving It To The Last Minute
So many people leave sorting out their pension plans until the last minute and are left bitterly disappointed when they realize they will not have as much to live on as they thought they would.
Do not be one of those people, get it sorted now and enjoy the knowledge that you will have something to live on that fits your lifestyle and desires much better than what you may have been offered on the state only.
Avoid The Pitfalls
Sadly, there are a lot of scams when it comes to pensions, and it is really worth being careful when planning your investments.
It is not just scams either, there are lots of pitfalls that are easy to fall into, here are four that you should avoid for a healthy pension pot and future retirement.
Not Exploring Your Options
You really must take financial advice when deciding on your pension investments and speak to a professional who really understands the markets and what you could get for your money.
There are lots of options on the market, and a financial advisor will be able to take you through things like your investment options, fixed annuity rates, ISA accounts, or even releasing equity in your home.
It is a big wide world of pension investments, but you must choose wisely!
Running Out Of Your Savings
How long are you planning to live for? Horrible question, right? It is one that you do need to ask yourself though.
Not in the context of planning for your death, but for planning the length of your retirement pot. Do not under-plan for your life, or take money out too early leaving yourself in financial difficulties at a time in your life when you will be needing to concentrate all of your efforts on your health and wellbeing.
Considering The Tax Payments
Did you know that the first 25% of your lump sum withdrawal is tax-free? That sounds great, but that leaves the other 75% of your lump sum that will be taxable.
The fact that you need to pay tax on the remaining amount does not mean you should avoid taking out lump sums if that is something you want to do, but you should plan for the tax you will need to pay so as not to face a hefty tax bill that you were not expecting!
Multiple Pensions
One of the best things to happen in the last few years is auto-enrolment for pensions. This has meant that everyone who works a PAYE job will be saving for their pension by default, making the financial lives of the everyday worker much more secure in the future.
The downside of this is that it is easy to lose track of what pensions you have and what investments you are part of.
Keep track of everything and consider consolidating pensions if it is easier for you and your family, that way you will not be missing out on the money that YOU have earned and that YOU deserve.
