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How to take tax free cash ?

JSL_2
Posts: 37 Forumite

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
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
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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.1 -
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.1 -
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
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!1 -
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
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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.0
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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 75.1 -
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
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 ?0 -
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.
2.72kWp PV facing SSW installed Jan 2012. 11 x 247w panels, 3.6kw inverter. 33MWh generated, long-term average 2.6 Os.Not exactly back from my break, but dipping in and out of the forum.Ofgem cap table, Ofgem cap explainer. Economy 7 cap explainer. Gas vs E7 vs peak elec heating costs, Best kettle!1 -
Extremely hard to answer that, without knowing your full financial picture and your desired income in retirement.1
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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?
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 NHS0
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