Perennial Wealth: 3 Vital questions to answer before you take a lump sum from your pension

1. How would withdrawing a lump sum from your pension affect your long-term income?
You may well need to rely on your pension to provide an income for the rest of your life. So, understanding the long-term effect of withdrawing a significant proportion of your savings at the start of retirement is essential.

2. How and when will you spend your tax-free lump sum?
Before you withdraw money from your pension, considering how and when you’ll use it may be important. Reviewing your pension and retirement plans first could help you answer questions like:
• Would taking a lump sum from my pension mean I have a lower income in retirement?
• Could withdrawing a lump sum affect my ability to overcome financial shocks?
• How long would my pension last after I withdrew a lump sum?

3. Is Inheritance Tax something you need to consider?
While you may only just be thinking about retirement, it’s often a good idea to consider your estate plan too. If your estate could be liable for Inheritance Tax (IHT), leaving more of your wealth in your pension could make sense.

Typically, pensions are considered outside of your estate when calculating IHT. By leaving your pension to loved ones, you could reduce or mitigate how much IHT your family may pay when you pass away.

If you would like a review of your pensions and investments and whether you are on track to achieve your retirement goals, please contact Perennial Wealth for a free consultation.
0117 959 6499;; Trym Lodge, 1 Henbury Road, Bristol BS9 3HQ