When you get to the point of retirement, there are a bewildering array of options available to you, particularly regarding pensions. In today’s episode, I’ll be giving you everything you need to KNOW and everything you need to DO to make good choices at retirement.
SHOWNOTES:
CHAPTERS:
00:00 – Intro
03:04 – Everything you need to KNOW
03:23 – How the State Pension works
07:03 – How DB Pensions work
10:49 – How DC Pensions work
17:38 – Everything you need to DO
17:51 – Understand your pension provision
20:01 – Establish your cashflow needs
21:21 – Match cashflow to expenditure
24:01 – Beware the Danger Zone
25:02 – Keep taxation in mind
26:59 – Keep an eye on the Lifetime Allowance
29:18 – Summary
29:51 – Meaningful Academy launch
31:13 – Review
32:23 – Outro…(read more)
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The thought of retirement can be both exciting and overwhelming, especially when it comes to understanding pension retirement options. It is essential to have a plan in place to ensure a comfortable life after retirement. With so many different types of pension plans available, it can be challenging to understand the best option for your circumstances. Fortunately, this ultimate guide to pension retirement options provides valuable information to help you make an informed decision.
What is a pension plan?
A pension plan is a retirement benefit provided by an employer to their employees. It serves as a financial safety net to support them during the retirement years. There are various types of pension plans, such as defined benefit plans, defined contribution plans, and hybrid plans.
Defined Benefit Plans
A defined benefit plan is also known as a traditional pension plan and is offered by an employer. This pension plan promises a specific benefit amount in the retirement years based on the participant’s age, salary, and years of service. Employers are responsible for funding and managing these plans.
Defined Contribution Plans
A defined contribution plan is also known as an investment plan and is a type of retirement plan where employees contribute a certain percentage of their salary towards retirement. This type of plan includes a 401(k) plan, 403(b) plan, and an individual retirement account (IRA). The employer may also contribute or match the employee contribution to the plan.
Hybrid Plans
A hybrid plan is a combination of a defined benefit plan and a defined contribution plan. This type of plan is offered by some employers. The retirement benefit amount under the hybrid plan is calculated based on both the defined benefit plan and the defined contribution plan.
Choosing the right pension retirement option
Choosing the right pension retirement option requires evaluating your financial situation and understanding your retirement goals. Here are some factors to consider when choosing a pension plan:
1. Retirement goals
It is essential to determine your retirement goals before choosing a pension plan. This includes evaluating your retirement lifestyle, goals, and expected expenses.
2. Financial situation
Evaluate your current financial situation to determine the amount you can contribute towards your retirement plan. This includes considering your income, expenses, and any outstanding debts.
3. Employer contributions
Understand the type of pension plan your employer offers and any matching contribution they provide. This may be an essential factor while choosing a pension plan.
4. Investment options
Understanding the investment options in the pension plan is crucial as it will affect the growth of your retirement savings.
5. Retirement age
Determining your retirement age is essential when selecting a pension plan. Some plans may have an age requirement to withdraw retirement benefits.
Conclusion
Choosing the right pension retirement option requires careful evaluation of your financial situation and retirement goals. It is essential to plan for retirement early and make informed decisions regarding your pension plan. Consult financial advisors and retirement experts to guide you through the process. With the information presented in this ultimate guide to pension retirement options, you can make an informed decision regarding your retirement plan.
Thanks! It's a very useful video!
Loving this content. Not just for the outstanding financial advice, but as a fellow YouTuber I appreciate the quality of the content in terms of construction. All in all a valuable use of my time! Keep it going!
thanks Pete, even though I have some clear ideas about retirement you've got me considering wider options and strategies. just need to master investments now..
Be interested to know your opinion on 'With Profits Retirement Annuity Contracts' Pete? Looking what to do with mine from the Pru – to say it's opaque is an understatement, the details, especially regarding 'possible' final/terminal bonus seem to be veiled in mystery! Unfortunately it doesn't have a GAR – but they've always made much of it's 'guarantees' – by which I think they mean the 'minimum income.' – and how I was able to 'lock into' favourable conditions available in the 1980's when the contract commenced?!? However, it seems annuity wise it would be no more than what's available on the open market. Person I last spoke with at the Pru admitted even she didn't understand the letter sent attempting to clarify the 'possible' bonuses – and worryingly remarked it would be difficult finding anyone amongst their staff who was an 'expert' on the with profits retirement annuity. She also 'suggested' that any possible final/terminal bonus would have been incorporated into past 'illustrations,' – which seems odd given literature over the years which seemed to claim it could only be known at the time of the 'final quote.' Any thoughts you may have will be gratefully received!
Crystallized? Zones stranger than Our tangled web of taxes and Fees?
Still trying v to decide pension or lump sum? Fixed $1840 No COLA orump su. Of $236K
Nothing wrong with Trump supporters. Biden supporter will be somewhere else as they can even vote after life.
Pete, Just discovered your channel. Retired early last month after a lot of soul searching and DIY planning. Your videos are very clearly constructed and presented, in a pragmatic, unbiased way. Wish I’d found you earlier. Thankfully, your videos have been mostly reassuring, but also revealing a few nuggets resulting in subtle adjustments to my financial plans. Wanted to thank you for the high quality content and wish you all the best with your channel. With the COVID pandemic having caused many to re-evaluate their life options, I suspect your client book will be growing healthily.
Thank you.just subscribed but have always found your videos and podcasts very helpful. Also just bought your book. Just about to take a small DB pension a few years early. I get more payments with 6% reduction. But will use the extra payments to buy Class 3 contributions I need for the full New state pension (top up is worth more than the DB pension I give up). So it’s win-win.
Thinking of transferring pot to a no risk fund ,for remaining year ,it does not have to acrue anything ,any tips
If I had known years ago that know now I would not have done a pension but some other investment to save for old age because I am in America and my pensions are stuck in the uk
4 mins in before he sort of starts…..
Man…. so much editing out required….
Nobody cares what "season and episode" it is. Google does not either so you wasted 30 plus seconds of critical SEO keywords talking about stuff that's not helping the video viewer or anyone else in being able to find your video .
These videos are some of the best on the planet (for a UK based person), the knowledge is superb, if I could afford an IFA I fear how much they would charge, yet this info is available on this channel for free, quite superb and the effort taken to produce must be considerable, well done to you Pete
Pete you are amazing! Please keep up the good work! 🙂
Would love an episode of the different platforms of ISA and how they compare like the Lang Cat report you mentioned in your book (if you are allowed to of course)
If you have any excel template that would be great as well!
Do you feel Pete, bearing in mind likely tax increases, that the triple lock is bound to be abandoned for more affordable increases?
Is it possible to do a video on the plus sides of using SIPP for IHT planning I am a 40% tax payer from self employment and from investment income I pay all of my self employment earnings into SIPP and it is my intention only to take the Taxfree Cash and leave the rest of the funds to my grandchildren and this has tax advantages I haven't seen this aspect of IHT planning with the use of a SIPP I understand that SIPP funds are ring fenced from bankruptcy god forbid if it were to happen in business just look at COVID and the number of business which will go under I belive SIPP has a lot more advantages but are seldom covered
hi, you mentioned people have to report to HMRC when the selling amount reached to £49200 even the profit is less than £12300 in your previous video. Does this include the selling in the ISA account? Thanks
Pete, as someone studying with CII (currently on R04) I find your content increadibly useful. Thanks for everything you do!
Pete great video I never thought about pensions until recently. My goal is to retire or semi retire at 57 and spend time in Spain time and in UK. Do you think I could retire or get a part time job in UK in summer with a figure of 250000 please thanks pete Ps I have hit my 35 years been working since 15
Thanks Pete. Great video as always. Looking forwards to the next in the series.
Informative video and content uncle Pete, thanks for producing.