Should I access my Tax Free Cash now I’m 55?

Should I take my pension lump sum?

A huge number of people will turn 55 this year, giving them access to their pension fund.

The number of people estimated to reach this milestone in 2020 is around 940,000 people.

As you are probably aware when you reach 55 you then have the option to access your pension tax free lump sum.

So should you do it ??

If you’ve done a little bit of research, you will know that you are able withdraw at least 25% of your fund tax free.

However, just because you can, it doesn’t mean you should.

You should only take money out, if you really need it.

Overall the advice is that you should stay invested if you are not ready to retire.

We have seen cases of people taking money from their pensions and just putting it in the building society. This is bonkers,  especially if you’ve still got at least 10 to 15 years until your retirement date,  especially when you look at the current interest rates that are available.

Stockmarket Falls and volitility

This is particularly relevant at the moment, if you draw money from your pension account and it has dropped in value, you are crystallising the loss when you take money out.

Costs

It may be that your existing pension arrangements don’t support flexible drawdown. Therefore for you to access your tax-free cash only, you may need to transfer the funds into a into a new arrangement that allows this.

Just be mindful if you do transfer your pension funds you may incur additional costs to get this done.

You could have advice fees if you use an financial adviser and these costs can vary hugely.

Or you could lose valuable benefits from your existing arrangements on transferring.

Therefore it is important that you look at all your options and way up the costs and benefits before deciding to proceed.

DIY or Advice ?

There are some self service options available such as Hargreaves Lansdowne, where are you can transfer your money to their SIPP and access the money,  but you will be fully responsible for the ongoing investment and review of your pension funds.

Alternatively you can engage the services of an independent financial advisor.

At Gardner financial management we do offer a retirement planning service and would be happy to discuss any retirement or pension concerns that you have.

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