How to retire using an ISA & PENSION tax efficiently // UK Pension & ISA
In some recent research from Aviva the age at which most aspire to retire early is at age 60. This therefore leaves a gap between age 60 and their State Pension age. This video looks at the position of having both pension and ISA assets and considers where should the income be taken from and how it can be balanced and drawn in the most tax efficient manner. We’ll also consider the death benefit position of each in terms of tax.
Aviva article referenced:
I can be contacted at edmund@featherstonepartners.co.uk
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The information provided is based on the current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.
All references to taxation are based on my understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances.
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Keep in mind that the value of your investments can go down as well as up, so you could get back less than you invest.
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That was an excellent and really useful video, thank you. The usual advice is to use the ISA first and keep the pension for the inheritance benefits, however, if you don't have any dependants, seeing a different approach is really helpful. Would there be any benefit to using your pension money, tax free or otherwise, to add to the ISA?
Great information .. Thanks
I have been informed that the state pension is now comes under the WORDING by the DWP that it is a BENEFIT now? , I strongly disagree with this word terminology, that means the Government can use benefit changes to cut pensions etc etc, it is not a BENEFIT we all worked and paid in, it is our money not a dam BENEFIT..plus the UK pay one of the lowest pensions to it's own people compared with other WESTERN countries MEAN-MEAN-MEAN as usual here…The French pension age is 62, basically the UK government pension age is 66 and going up to 68 they want you to DIE it is as simple as that so they do not have to pay you a pension, I know (The TRUTH Is A son Of A Bitch)..Bastards the British government
Great video – thank you! I wonder whether taking into account state pension (which is about £10000 taxable income) will change the picture and make the whole thing less tax efficient.
Excellent. Love hard numbers with the visuals. Helps to illustrate the points.
Why does no FI talk about variable income. I will not need the same amount of money when I'm 85 as I do at 65. I will be looking to front end my expenditure, and spend the majority of my money in the first 10 years. Viper green Lamborghini comes to mind 🙂
Is it possible if you're lucky enough to have enough money in a stocks & shares isa, plus a pension account, to just draw out from the pension drawdown account up to the personal allowance . So I assume no tax to pay on that, and then top up your income with withdrawals from your isa tax free, at least under present rules. Am I correct in my assumptions
The chart would be clearer if only one colour was used for each income type across the whole chart.
In addition to my workplace pension (opt-in) I'm also investing in an index fund provided by Vanguard. It's in an ISA account too. I just want to be safe on case something happens to my personal pension.
my friend into pension time pays so much fees on his pension so he is prepared to take lump sums and put them on isa. He can do 2 years of £20k as tax allowances on isa. However when he will get (if he gets) dividends from stocks, do these dividends count against the tax allowance £20k? Let's figure out that he puts straight away £20k, then maybe he will get £2k as dividend for the same tax year (that is before 5 April 2023) or even perhaps capital return such as what Aviva did this year. In these cases how can he calculate and what will happen if he does not take the money to his nominated current bank account? Does it mean that the £2k dividend he will receive from his stocks this year will be deducted from the £20k he wants to put into the S&S Isa next year? Otherwise he's got to put less money into the S&S isa but it is soooo difficult to figure out in advance how much dividend he is likely to receive ultimately? Your guidance would be useful. Many thanks in advance.
I did not think you could have a £20k a year income off £300K of investments. This makes me breathe easier as I had a ISA target of £500k to get a £20k income given the 4% rule. If I can get £30k a year off £300K then retirement may well happen sooner 🙂
Great Video, Thank you! Would love to get to use the tool that you are using. Most of the the tools online are basic and do not cater for multiple retirement income streams and options (SIPP- with or without taking lump sum, Company Pensions, State Pensions, ISAs, etc).
Hi Edmund, great content, great channel, I'm binge watching! Would love to know some of the websites you're using especially the retirement calculator in this video? Can you recomend a free one if this is subscription based? Cheers.
If I defer my work pension till age seventy and live on state pension , rental income and ISA money ; are the continued payments to work pension tax allowable ? I believe my income will exceed my allowances and would like to offset the difference by continuing to improve my work pension but this only works if it is tax allowable ?
Very informative, thanks. approaching 60. 40% tax payer, plan to jack in soon. I Have a final salary pension, SIPP & property income ; is there a benefit to taking all of your 25% in one go at end of tax year and putting £80k in ISA's for both me & Wife. Use tax allowance of Final salary/property & top up with ISA?
Would this still work with cash ISAs
All good if you have money and have good wages but if you don't what happens then.?
Wish my financial advisor spoke as simply as you.