Investing for Retirement: Frequently Asked Questions

If you’re looking to invest for your retirement rather than receive a guaranteed income, you may need to consider some important questions before you do so.

Retirement can bring many variables into the mix, meaning finding the right kind of investment is a complicated decision. When saving, you will want to have something substantial to live on without running out of money, as well as potentially leaving something for your loved ones.

What are some of the most important questions on investing for retirement?

How can I reduce how much tax I have to pay?

Many savers are concerned about inheritance tax that their loved ones may have to pay. Some important methods on helping to reduce this burden is making use of the residence nil-rate band, gift allowances or trusts.

Many retirement pots are taxed as income in the usual rates of 20, 40 and 45 percent. Here, it’s important to mitigate the risk of incurring a higher tax bill by being wise about the amount you withdraw from your pension savings.

What about cash?

It’s a good idea to keep some of your portfolio in cash to ensure your income in a time of market falls. This means your future income can withstand more volatility, helping it to be more secure than if you were to draw on an invested asset.

So, what level of income should I take?

Thanks to the Pension Freedoms reforms, savers are able to withdraw money from their pension pot without restrictions.

However, it’s important to make wise decisions to avoid running out of money, ending up within a higher tax bracket or jeopardising your savings.

A great way to decide on the percentage of your pot that you should withdraw per year is to contact a financial adviser, such as our team at KLO. Here, we can work with you to work out a plan to see you through your retirement and ensure you are able to live comfortably whilst maximising your savings for the future. Of course, the amount you will need to take out or save per year will involve your age and your attitude to saving and risk.

Who should I talk to regarding investing for the future?

If you’re looking for help in investing in retirement, investment management and help reviewing your investments, contact our local financial adviser team today. Please call on 01926 492406 or email us at enquiries@klofinancialservices.com to make an appointment.