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Guide to Retirement planning
A quick guide to saving for retirement
For many of us, retirement may seem a long way off, but it’s essential we all plan ahead.
Make a few decisions
First you’ll need to decide how much money you’d like to have when you retire and what age you’d like to (realistically) retire. You should consider all the savings, investments and pensions you may already have.
Choose how to save
After that consider the pros and cons of different ways of saving. Investments and Savings accounts can give you fast access to your money, but a pension is highly tax-efficient. Thanks to government tax relief, for every £80 you save into your pension, the Government currently adds £20. And for higher rate tax payers the benefits are even better.
If you don’t want to tie-up your money… you’ll need to consider other ways to build up your savings for retirement. For instance you could build up money in an investment such as a Cash or Stocks and Shares ISA and switch it to a Pension when you feel the time is right. However, by saving in this way Abbey will be unable to project and monitor how your pension fund is performing, and whether it will meet your retirement goals.
You could also consider our 50+ Saver which offers a fantastic rate of up to 2.00% gross/AER* on instant access savings specifically for the over 50’s with a minimum balance of £1.
If you’re prepared to start a pension… then a Stakeholder Pension is an excellent way to start saving for retirement. The minimum contribution is £20 at any time and, because it’s flexible, you can stop and re-start contributions whenever suits you. Pensions should be viewed as long term investments.
For every penny you put aside, the Government will add an extra bonus in tax relief. So if you save £80, the Government will add £20 tax relief. And, if you’re a higher rate taxpayer you can claim additional tax relief through your tax return.
When you reach your chosen retirement age you can take up to 25% of your pension as a tax-free lump sum. The rest provides a steady (taxable) retirement income for you (and your spouse if you have one). You can start taking benefits from age 50 (increasing to 55 from April 2010) and you must start to take your benefits before you reach 75.
If you’d like to know more about Abbey’s retirement planning options, please call us on 0800 028 2805. We’d be happy to help.
The Stakeholder Pension is provided by The Royal London Mutual Insurance Society Limited
Please note, the value of pensions can fall as well as rise and is not guaranteed. The size of your fund on retirement will depend on future investment performance, the level of contributions made and the actual age at which you retire.
The Stakeholder Pension is provided by Phoenix Life Assurance Limited. Phoenix Life Assurance Limited is authorised and regulated by the Financial Services Authority. Phoenix Life Assurance Limited is registered in Scotland No. SC134205 Registered Office: 287 St. Vincent Street, Glasgow, United Kingdom, G2 5NB Tel: 0141 275 8000. Calls may be recorded or monitored.
Abbey National plc sells Phoenix Life Assurance Limited’s life and pension products.