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State Pension and how it may benefit you

State Pensions have the obvious benefit of providing part of your income in retirement.  They could be considered as the base level of your retirement income.  They can also be a versatile part of financial planning.

For those who are considering retiring later than State Pension age you have the following options:

  • Draw your State Pension and use the surplus net income to add to your savings for retirement
  • Defer drawing your Pension and benefit from an increase in State Pension. For those drawing their Pension now the increase is just under 5.8% per annum
  • Draw your State Pension and recycle the extra monthly income into another pension. This is tax and income neutral

All of the above options need careful consideration and advice.  You need to take into account your own individual circumstances and current pension legislation.

State Pensions can also be useful to take into account when you are considering early retirement.  Obtain your Pension forecast and use the detail to help plan your income requirements.

  • By factoring in your State Pension income at your Pension age you can draw additional income from other assets leading up to your Pension age
  • You can lower your income from your other income producing assets when your Pension is paid. This could help preserve your other assets for the longer term or even the next generation

Should your State Pension really be surplus to your requirements you could even gift it as regular excess income as part of your inheritance tax planning.

Not only is the State Pension a useful retirement income but you can use it when you consider your financial planning as a whole.

Please take advice when you are considering your Pension and retirement income options. Contact us at People and Business, click here.

 

Steve Speed

30/08/2016