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How to take tax free cash ?

 How does everyone take their TF allowance from pot ?
I have 260k and am approaching 65 , if I take 8-10K Per Year, with 25% TF, I will be well in to 90s before I use all the TF Cash . I would rather have more in the early years of retirement, when more active. So take all at start of drawdown and put in isa & savings . or spread out over 10-15 Years.
Appreciate any thoughts on this 
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Comments

  • SVaz
    SVaz Posts: 380 Forumite
    100 Posts First Anniversary
    edited 18 October 2023 am31 9:11AM
    You can take it any way you want.
    If it will benefit you to split the Tax free cash over say 5 years then do that.
    I plan to take a £3000 tax free lump sum ( no taxable income) x 10 years from age 67 from one of my Sipps but could change it to £6000 x 5 years etc. 
    I would rather do that than take £30k upfront as it will give the pot a better chance of growth. 
    It will depend on our needs at the time. 
  • dunstonh
    dunstonh Posts: 118,574 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    The best method is the one that is most tax efficient and suitable for your objectives.

    Taking it all up front doesn't seem to be the best option in this case based on the very limited info you have given.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Marcon
    Marcon Posts: 12,969 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper Combo Breaker
    JSL_2 said:
     How does everyone take their TF allowance from pot ?
    I have 260k and am approaching 65 , if I take 8-10K Per Year, with 25% TF, I will be well in to 90s before I use all the TF Cash . I would rather have more in the early years of retirement, when more active. So take all at start of drawdown and put in isa & savings . or spread out over 10-15 Years.
    Appreciate any thoughts on this 
    You sound an ideal candidate for a free appointment with PensionWise: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

    They don't give financial advice, but their guidance and information can be extremely valuable in helping you to take an informed choice about how best to proceed.
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • xylophone
    xylophone Posts: 45,426 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    A brief summary here but remember that you will need to check with your pension provider what options are offered under your plan/policy.

    Older arrangements may well not offer full flexibility so that a change of plan/provider might be required.


    https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise/explore-your-pension-options/the-six-pension-options

    Are you just about to start taking benefits from your pension?

    Has your provider sent you an options pack?

    Have you obtained a state pension forecast to help with your planning?

    https://www.gov.uk/check-state-pension
  • wjr4
    wjr4 Posts: 1,272 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Are you still working? Do you have an inheritance tax liability? 
    I am an Independent Financial Adviser (IFA). Any posts on here are for information and discussion purposes only and should not be seen as financial advice.
  • AlanP_2
    AlanP_2 Posts: 3,499 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    My thinking is to take it as part of each withdrawal until age 75 and then take the balance of the TFLS.

    My reasoning is that my inheritors would get it tax free before death at 75 but would be liable for income tax after 75.
  • JSL_2
    JSL_2 Posts: 37 Forumite
    Sixth Anniversary 10 Posts Combo Breaker
    xylophone said:
    A brief summary here but remember that you will need to check with your pension provider what options are offered under your plan/policy.

    Older arrangements may well not offer full flexibility so that a change of plan/provider might be required.


    https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise/explore-your-pension-options/the-six-pension-options

    Are you just about to start taking benefits from your pension?

    Has your provider sent you an options pack?

    Have you obtained a state pension forecast to help with your planning?

    https://www.gov.uk/check-state-pension
    To answer your questions

    I will be start taking from my pension in next tax year (24/25) I will be age 65. I have had my information pack from Royal London. Both me and spouse will have full state pension.
    I do understand how drawdown works, my dilemma is whether to take a regular sum in drawdown, 25% Tax Free and pay tax on the rest.
    If i take more of the Tax Free , in first 5-10 years it avoids taking money from fund to give to tax man.
    or
    Should I use money from Cash ISA's and SS ISA's before pension pot so as to avoid paying money to tax man till I have to ?

    In other words what is the most tax efficient way to live on my nest egg of Pension Pot, S&S ISA's and Cash ISA's  ?
  • QrizB
    QrizB Posts: 15,238 Forumite
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    edited 20 October 2023 pm31 6:35PM
    JSL_2 said:
    In other words what is the most tax efficient way to live on my nest egg of Pension Pot, S&S ISA's and Cash ISA's  ?
    How much a year do you think you need in retirement? Do you hope to leave an inheritance or is your goal to die penniless?
    How much do you have in your pension pot (£260k?), and what is te combined value of your ISAs?
    Will you be receiving a state pension, and (if so) what is your forecast?
    N. Hampshire, he/him. Octopus Intelligent Go elec & Tracker gas / Shell (now TT) BB / Lebara mobi. Ripple Kirk Hill member.
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  • NoMore
    NoMore Posts: 1,441 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Extremely hard to answer that, without knowing your full financial picture and your desired income in retirement.
  • JSL_2
    JSL_2 Posts: 37 Forumite
    Sixth Anniversary 10 Posts Combo Breaker
    QrizB said:
    JSL_2 said:
    In other words what is the most tax efficient way to live on my nest egg of Pension Pot, S&S ISA's and Cash ISA's  ?
    How much a year do you think you need in retirement? Do you hope to leave an inheritance or is your goal to die penniless?
    How much do you have in your pension pot (£260k?), and what is te combined value of your ISAs?
    Will you be receiving a state pension, and (if so) what is your forecast?
    18-20k per year  from my pot and Full SP will pay all the bills, run car and supplement current lifestyle.  Yes pension pot approx 260k . 120k in Isa's which will be for holidays/emergencies. If I live to 90 not worried about dying penniless , kids (2) have house approx 300k value as inheritance, plus what's ever left ,whenever we pass.  Wife works part time for 16.5k PA. She will have NHS pension plus full state pension. She also has around 70k Isa's. 

    Looking for most tax efficient way for me to take money and enjoy life while fit enough.
    Wife  Tax situation will be different as pension is NHS
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