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Making the most of your pension freedoms

2 min read
Olivia West, Senior Director, Private Clients16 May 2024

The path to financial freedom is a marathon, and the finish line is all the rewards for the hard work you’ve put into making it to that stage.

The journey can sometimes feel long, and that’s the catch. It takes a bit of planning – or at least delegating to those who can plan for you – to reach the finish line on your terms.

Pension freedoms

It’s been a decade since then-Chancellor George Osborne announced a new piece of legislation that would become a game-changer for individuals who hadn’t yet entered retirement.

With the introduction of pension freedoms, which came into force in April 2015, it became possible for over-55s to draw down up to 25% of their pension as a lump sum, free of tax.

Although the new regulation gathered many supporters, it also attracted opponents. One thing is certain regardless: pension freedoms introduced much more flexibility in the way people can manage their pensions and plan their journey towards financial freedom.

The long run

Being allowed to start withdrawing money tax-free from a pension pot from the age of 55 changes the retirement playing field for those still in employment.

This means the possibility of a higher income available earlier in life, so planning for retirement could take a new dimension.

If you’re still in employment, it’s almost certain you’ve thought about retirement. But when would you be happiest retiring? Would you have enough money to sustain the type of life you’d like to have in retirement?

More flexibility, more pitfalls

But equally, if you lead a busy job and/or earlier retirement has always been on the cards, it’s always useful to understand what life might look like after you stop working.

Feeling financially secure is extremely important, whatever your circumstances. The easiest way to be in control is to make sure your money is working for you in the most tax-efficient way.

It’s also important to understand your various sources of income in retirement, how much they could help you to maintain the lifestyle that matches your dreams, and how the remaining source of income could be invested for growth before being withdrawn.

Here to help

Getting retirement right is a priority because there is no second chance when you get there. That’s why at 7IM we work closely with an established network of partners. We understand that your needs will evolve as you and your family progress through life, so our family office can cover any aspect related to your wealth.

Our advisers at 7IM work with clients under different financial circumstances, with different ambitions, to help them reach their financial freedom. Talk to us if you would like help to understand, plan, or execute your journey to financial freedom.

Please note that this article is intended for educational purposes only and should not be taken as investment advice. Tax rules are subject to change and taxation will vary depending on individual circumstances. The value of investments can go down as well as up and you could get back less than you invested. Investment in funds will not be suitable for everybody and you should make yourself aware of the risks before investing and if you are unsure, you should seek professional advice.
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