Yes, any savings will be after PAYE, so will be taxed already. It’s a minefield and I’m just thinking about how to be kicked in the bollocks as little as possible when, and if I ever get to retirement!Has the money you intend to put into "savings" been earned through employment? If so, you have probably paid tax on it already.
But money you pay into a pension scheme is not taxed. It is taxed when you withdraw it instead. However, under drawdown, the first 25% is tax free and rest is taxable at your marginal rate. In fact it is possible to withdraw it all tax free if the taxable portion is below your allowance.
In summary, pensions are tax efficient. Your are likely to pay far more tax on "savings".
I am mistaken and you are correctThe pot of cash goes to your nominated beneficiary.
Yes. You have to teach yourself. There's plenty of info on the internet though. Martin Lewis MSE forum is good and I learned a lot from that.Yes, any savings will be after PAYE, so will be taxed already. It’s a minefield and I’m just thinking about how to be kicked in the bollocks as little as possible when, and if I ever get to retirement!
I get that a pension is tax efficient when you put the money in, but then it can be financially painful to be able to use that money as you want to when the time comes. As with everything in this country, it’s bloomin’ hard work for the average Joe. Thanks.
A lot of sense in there. I said this a couple of weeks ago, we get told all our working lives to put as much as you can into the pension pot but you need so much money when your kids are young and, like my case where I’m looking after 4 of us. There’s just no way you need massive amounts of money if you are lucky enough to get to your lates 60s and 70s.You can leave your unused drawdown pot but it might be taxed on the beneficiary after the age of 75 depending on how they withdraw it and what tax rate they pay.
It’s an interesting one this, and whilst you can guarantee pots with annuities and provide for a spouse if you wish, many people still prefer drawdown for the death benefits they provide.
That shouldn’t be the reason for deciding on drawdown though for me except in a few circumstances. When you start saving into a pension, your objective isn’t to leave it behind for other people. It’s to build up a pot to enjoy your retirement. I think some people lose sight of what they saved for in the first place. Ideally you should spend every penny of your pension pot before you die. Maybe leave enough for a spouse but they should then spend it. The only exception I would say are people who have other savings/investments and an IHT liability. In these situations, the pension wrapper is a useful IHT shelter and it is often better to use other sources first.
In my experience, many people tend to over save and under spend, as the fear of the rainy day is always there. However, time really does tend to catch up with people and spending drops as you get older. The nightmare of care home fees is always looming large too.
Thanks, I’ve another 20 odd years to go yet, but thought I would ask others on this as I’ve started to think about it a bit more, especially seeing the in-laws going through this recently.Yes. You have to teach yourself. There's plenty of info on the internet though. Martin Lewis MSE forum is good and I learned a lot from that.
Certainly more beneficial for higher rate tax payers using salary sacrifice. There are arguments to have a mix of the two if you can afford it.Thanks, yes I get that. I just wondered if savings is a better option with less to stump up when you want to get at your own money. The ‘advice’ fee off the provider was eye watering.
It’s a fine balance. Financial subjects and money management should be taught in schools and universities and even in workplaces. It’s a complicated subject and industry, made more complicated by providers and regulators. Most people don’t understand it and as such tend to either avoid the subject altogether or use their mates as financial sounding boards and take everything they say as gospel.A lot of sense in there. I said this a couple of weeks ago, we get told all our working lives to put as much as you can into the pension pot but you need so much money when your kids are young and, like my case where I’m looking after 4 of us. There’s just no way you need massive amounts of money if you are lucky enough to get to your lates 60s and 70s.
Start putting into your pension early, but don’t overdo it. Live for today and if you get to retire, make sure you have a plan to spend most of your pot at a decent rate that prioritises doing things whilst you still have mobility and marbles!
No point being the richest person in the care home.
Believe me, you looking into this with 20 years left to go puts you well ahead of the majority of the population. The number of people i have spoken to in their late 50's and early 60's who just assume they will get by on a state pension is scary. Keep on reading and asking questions, you are giving yourself the best possible chance.Thanks, I’ve another 20 odd years to go yet, but thought I would ask others on this as I’ve started to think about it a bit more, especially seeing the in-laws going through this recently.
My mate is sane age as me is a plasterer, his body is fucked he’s blown all his money trying to bring two kids up on his own, he’s just moved into a council house his rent is £800 a month then bills etc, I asked him why he’s going to do when he retires he reckon the state pension is enough until pointed out it won’t even cover his rent! He’s has decent money all his life but spent it on clothes, cars etc. Then the two kids later have taken the rest, he’s totally fucked but just doesn’t realise it yet.Believe me, you looking into this with 20 years left to go puts you well ahead of the majority of the population. The number of people i have spoken to in their late 50's and early 60's who just assume they will get by on a state pension is scary. Keep on reading and asking questions, you are giving yourself the best possible chance.
It's incredible that people don't even understand the basics. With access to the internet, there's not really any excuse for not understanding roughly how much the state pension is and why you'd need at least some form of private pension.My mate is sane age as me is a plasterer, his body is fucked he’s blown all his money trying to bring two kids up on his own, he’s just moved into a council house his rent is £800 a month then bills etc, I asked him why he’s going to do when he retires he reckon the state pension is enough until pointed out it won’t even cover his rent! He’s has decent money all his life but spent it on clothes, cars etc. Then the two kids later have taken the rest, he’s totally fucked but just doesn’t realise it yet.