Increasing tax rates are the reason I rolled over my 401k to a Roth. I don’t want to be 59 paying taxes on current income on withdrawals made from my retirement account. I'm now seeking best possible areas or ways to gain wealth in today's economy.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
Both have their perks but you can also save for retirement outside of a retirement plan, such as in an individual investment account or employing the services of a retirement planner/investment advisor.
Private investing is the best way to go about the market right now, especially for near retirees, I've been in touch with a wealth manager, netted 370K the last downturn, made it clear there's more to the markets than we average joes know.
I'm cautious about giving specific recommendations as everyone's situation varies. Consider independent financial advisors like "Sophia Maurine Lanting" I've worked with her since the pandemic and highly recommend her. You can check if she meets your criteria.
These frequent tax code changes are disrupting my long-term investment strategies. Are there ways to structure my investments to be more resilient to potential tax code modifications?
I honestly think America needs a completely restructure of their political system. It is just not working. Trump and Biden being elected out of 300 million people to run the country is evidence for that too.
This is why the US should elect more progressive politicians, who know how to manage budgets and give us (yes, pur country's initials literally spell out that pronoun) much better tax credits in return for better public education and better public healthcare. but since these are nonexistent, my husband and I are being guided to finance our retirement and healthcare through a diversified investment portfolio
@@hasede-lg9hj How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?
How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?
Another informative episode, Dianne, thanks. I've just retired and taken my 25% and put it in Premium Bonds. Though considered not the most efficient option, I've been happy with the return on my NS&I accounts over the past few years. My main reason for taking my money, though, was that, like others, I believe there is a good chance the Labour Government will reduce / remove the tax free opportunity.
@@haalstaag Hiya. I used part of my money to top up my Premium Bonds, and transferred some to my wife for her to set up a Premium Bond account. She has also got a Guaranteed Income Bonds account at the moment, and I had one last year. Think it just depends on which account the individual wants to choose. If you want best guaranteed return, then probably the Guaranteed Income Bonds is your best option. I've actually done ok with my Premium bonds, winning between £25 - £400 most months. Think this is because I sometimes cash in the Premium Bonds I've bought in smaller amounts, and re-invest as a single large sum. Believe this gives me a bigger single catchment group of numbers rather than lots of smaller isolated ones. Hope this helps.
Nice video Dianne, a few years ago I was planning my retirement and had the thought I’ll take all my tax free in one go, then invest it. At the time it was about £50K from DC schemes and £50 K forecasted in a DB scheme. Watching various you tube channels I’ve realised that would not be a tax efficient method of accessing the money, or a good way when the DC scheme was growing faster than other investment areas. At present there is no mention of the tax free portion on DB pensions, but my simple view is 1) the money in the pension pots is invested tax free, so yes understandable to tax it when accessing it if it exceeds personal tax allowance. 2) the tax free lump sum is a bonus to attract people to save into a pension. Currently the max at £267K is a very nice pot if you have over a million in your fund ( I wish) even if it’s capped at £100K you have not paid tax on this money. 3) I am more annoyed by tax being due on savings where you have already paid tax on the money eg £20K in a bank account at 5% attracts tax, WHY? I would like to see exactly how much that generates for the government each year. Sadly while pensions are great saving tools the education of their benefits and tax efficient ways to access the funds is very sketchy. Currently you get steered towards a pension wise free 1 hour telephone call on decisions that could cost you thousands
The problem is, none of us knows how long we're going to live after we retire, so don't know how long our pension pot has to last or how it will be affected by changes in legislation.... assuming we can afford to retire in the first place, and that the retirement age doesnt keep getting increased (UK resident here)
I have never understood why you would want to take the tax free cash upfront, unless you're paying off your mortgage (which you should have paid off years ago). If you don't take the tax free cash then you will also get 25% of your future growth tax free as well, so lots more tax free money will be coming your way in the future.
Paying off a 4% mortgage early is probably the worst financial mistake you can make. Money in the stock market averages 8-9% per annum. A mortgage is the cheapest money you will ever likely borrow Take out 25% tax free lump sum makes every sense. Time it around January time so can max out 2 investment ISA years (only put emergency funds in cash and never use an isa for this use bank savings accounts where interest in generally better too). Unless you want to work until 67? A 25% lump sum can allow you to retire early , build a new business, change career, help out family, etc .
POTENTIAL future growth. You could end up with a future loss, then you’ll wish you took the lump sum. That’s why my biggest reason to take the lump sum is to diversify my retirement portfolio
True and for many it is the only time they will have an opportunity to have a large pot of reserve cash. As many are financially unaware of their options, think investments are for others they will happily take their 25% as soon as possible put it into bank accounts and pay tax on it. Even if it goes into an ISA they’ll pick a cash ISA with poor returns but a secure savings pot rather than a stocks and shares ISA with potentially much better returns. Some will even take annuities virtually guaranteeing at least 20% tax will be paid. For Labour if 50% of those looking at DC pots take their tax free sum early ahead of the October budget it will be a win for them as the money will no doubt attract tax when the person deposits it somewhere
I am constantly surprised by the naiivity of so many people. There is FUD (Fear, Uncertainty and Doubt) around the government's plans for every budget. Recent years included capping ISA contributions at £100k. It's a deflection tactic - stir up uncertainty about one aspect affecting many people, so that when that issue does not come to fruition, everyone breathes a sigh of relief because the things that were announced are slightly less severe. The concensus is "it could have been worse"! This is not a party-political comment, it is a generalisation.
Being close to retirement I am more worried about the forthcoming budget than any previous one. However, reading your point made me think back to when a company I worked for announced employee pension contributions were increasing from 8% to 11% and there was a huge sigh of relief that they were keeping the DB scheme (although that has been closed to accrual far more recently).
@@MrDuncl Understood. I guess the issue this time is that previous statements about not increasing taxes for working people have, as a consequence, focussed attention on investors and non-working (primarily retired) people as the targets for tax increases. Personally, I think the size of the voting population that is retired will present too great a risk at a future election for the current government to attack pensions too aggressively because it will come back to bite them. Pensioners have the longest memories!
Paid off mortgage and deposited balance into ISA. Fed up with funding an IFA, fund managers and fund administration costs. Time to take back control from the potential of meddling governments!!
On Thursday/Friday last, the IFS implored the Chancellor to reduce the pension tax free sum from £268,225 to £100,000. I imagine if you are able to utilize the maximum you should do so. But first. I would argue that the IFS are wrong for the following reason. Reaching towards your retirement you may want to buy a more suitable property in a location that is favorable for retirees. The £268k figure is approximately the average price of a property in the UK and could easily be funded by the maximum tax free sum. However, £100k will ensure more pensioners stay put. With Starmer unwilling to offer any guarantee that pensioners travel permits will remain and with many councils in England facing insolvency, Labour look likely to increase a raft of taxes and lower thresholds, especially the tax free sum during the budget. As it happens I think it unlikely any changenwill occur to the travel permits, at least not this year. The other major change that is likely, is to do with pensions inherited as part of an estate. These are currently tax-free but is the easiest thing to change making them taxable at death. It really is open season on pensioners. Last year the 'free' BBC TV Licence for over 75s was withdrawn cost so far £159+£170 or £329. This year the Winter Fuel Allowance; confirmed. Cost £200 or £300 but add the increase to the energy price cap at £150 and that makes it a maximum of £450 for over 80s. And (speculated) pension tax free lump sum reduction to £100k from £268k AND pension being taxable on death. Add to that a (speculated) council tax increase of at least 10%. Happy New Year.
You can only get £268k tax free if you have just over £1M in your pension fund, an amount that only a small minority of pensioners will have. The removal of the Winter fuel allowance is insignificant in the grand scheme of things.
If they reduce it to £100K for many that is still probably the largest pot of cash they will have ever had Some people do move on retirement not out of the area they live in but just to downsize and pocket the difference (plus probable lower ongoing costs). I can see council tax rising for many and of course this falls into one individual per house, there is already talk of single person discount being removed. An overhaul is required of council tax and for me something similar to the poll tax where everyone over 18 should be paying needs to be considered. We hear the tax free lump sum will be attacked, but what about for DB schemes as it’s not 25% of the fund value in a DB scheme it’s a more complex calculation I believe. My forecasted DB tax free sum is more than 25% of the CETX values I was quoted
I'm taking small monthly amounts of tax-free cash from my SIPP via UFPLS. No point in taking it all, since I don't need it right now and I would only end up paying tax on it in the bank...as stated, much better to leave the pot to grow (hopefully!). Note: If you take monthly UFPLS withdrawals, be careful which day of the month it gets paid. I just got taxed for September since I withdrew the money in the same tax month (period 5) as August by mistake! I know HMRC should sort out any overpaid tax eventually, but it's annoying since 1 day later and I wouldn't have been taxed on it!
Exactly I took mine in case the govt changed their mind as I didn’t trust them to maintain the 25% allowance for the next 30 years.. I’m getting 5.15 % on it for five years and I’m just living on the interest and not taking any pension. As the first 17k of interest is tax free per year and it earns me about 20k per year so I only pay £600 tax .You are totally correct , long term, just taking it out is not the best decision long term, as it affects the growth of the bulk pension.
Something doesn't add up here. To generate an annual income of £20k at 5.15% requires a capital sum of more than £388k. That is way higher than the maximum permitted tax-free lump sum, so there must have been other savings as well. It also suggests a pension pot of at least the previous Lifetime Allowance (more than £1m). That is way beyond the wildest dreams of ordinary people but well done for locking that in at more than 5% for five years.
My colleagues seem to be retiring to get their hands on the Tax Free cash despite having no plans of what to do with it. I just hope that on October 30th they aren't shown to be the wise ones while I am still adding (significantly) to my pension in my sixties
@@farab4391 The people I am talking about have 30+ years in a DB scheme. Even with a private scheme unless you have plans for using the money to pay off your mortgage or similar the interest on a lump sum could mess up your taxes. I'm currently piling money into an AVC to avoid higher rate tax.
If you have moved abroad before taking the 25% tax free, will you still be entitled for the 25% tax free when the private pension age has been reached?
Well in July a labour spokesman said they aren’t going to touch it ….. I don’t think labour and Starmer would lie to us and flip flop ….. ooooh hang on 🤔
Doubt it. It's the one aspect of private pensions that everyone seems to know about so to abolish it would cause a lot of upset across the board. The anti-Labour press and associated "Influencers" on RUclips etc are pushing the suggestion but there's no evidence for it. Just speculation.
@@Desmond.TuTu. I expect them to go back on many of the promises they made pre election, thats why they have invented the £22 billion fallacy. Plan to be poorer post budget, no matter how poor or well off you are.
for years we see people when it’s the budget waiting to see what they are going to get out of it, as this is the announcement of how the Goverment is going to raise its income my attitude has always been how much is it going to cost me. Will Labour attack the tax free lump sum? Will they reduce its limit eg £260K down to £200K or less? Or maybe reduce the % allowed? The money in a DC has had tax relief to help it grow the tax free part has always been a bonus. I have one DC scheme that I’ve accessed already so only about £25K tax free left. Yes it will be great if that remains and I don’t think Labour will scrap the tax free amount entirely. I wonder if they will go for the tax free amount in DB schemes? As a lot of the public sector have this type of scheme
I did see it suggested somewhere... And, given the current financial climate along with Labour's tricks so far, I'm please I retired last year and took my pension.....
If I retire at 60, take 250k tax free and put it in the 'bank', then sure I can take 3k out of that per month for 7 years, essentially meaning I've a 3k tax free income until 67. Assuming I don't need more than 3k per month in that period, I'd start using the remaining 750k at 67 + state pension, and get tax normally on whatever I take out. Does that not make more sense than an annuity? I see a lot of people buying property abroad in the thread, but I think I'd just rather remain as tax efficient as possible and travel 6 months out of the year. Sound realistic?
Leaving your tax free cash in a standard workplace pension ( which most people have ) does not guarantee a better return than a cash ISA. Both options need to be investigated and invested wisely to maximise returns.
Why take it and put it in bank account? Even if they reduce the limit still makes no sense at all. If you take it use it ( pay debts mortgage buy holidays renovate house etc) or don’t take it at all!
Yes use it but for many it is the only time they will have a chance to have a large easy accessible pot of cash. Many have no idea you can flexibly withdraw from DC fund taking 25% each time tax free, They have no appreciation you can just leave the DC scheme untouched and so growing until you need it. All within a nice (currently) tax efficient scheme. Scaring the population to withdraw their TF amount now and put into the bank/building society means once over £20K goes in a 20% tax payer will be paying tax on it , kerrching for the Government. I potentially could take all my TF lump sums and pay off my mortgage, but why use money that’s growing at 4X my mortgage rate to pay off the modest mortgage amount and take away the access to a lump sum should I need it. Even if TF lump sum is reduced to £100K that for vast majority is still a nice amount t to have AND people need to remember no tax has been paid on the money in a DC scheme
I am due 100k+ tfc from a db pension in 10 years. It reduces the pension to 17k a year. I can easily live off that plus the 100k, my state pension and other investments for at least 20+ year IF I survive. By which time I will not have energy to live properly. Why postpone it just to get a bigger monthly payout? Life could end at any time.
The number of people I know who say they are going to take the whole 25% in one hit makes me laugh, when I ask them what they're going to do with a large sum of money, how they're going to invest it and shield it from tax and inflation, they look at me like I've got two heads. They haven't even considered it for one second.
@@se3059 No, doesn’t apply, these are people who are nowhere near 55/57 so it won’t affect them for years yet. I’m just highlighting the ignorance of some people who just want the whole 25% without considering the possibility that there are better options.
I’m going to take the lot, and spend it! Fix the house up, even down size, then Holidays, cruises, travel. If you have money when you’re old and decrepit, you’ll pay for every thing. Put my property and any residuals in a trust for my niece.
*Amazing video, you work for 40yrs to have $1M in your retirement, meanwhile some people are putting just $10K into trading from just few months ago and now they are multimillionaires*
Increasing tax rates are the reason I rolled over my 401k to a Roth. I don’t want to be 59 paying taxes on current income on withdrawals made from my retirement account. I'm now seeking best possible areas or ways to gain wealth in today's economy.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
Both have their perks but you can also save for retirement outside of a retirement plan, such as in an individual investment account or employing the services of a retirement planner/investment advisor.
Private investing is the best way to go about the market right now, especially for near retirees, I've been in touch with a wealth manager, netted 370K the last downturn, made it clear there's more to the markets than we average joes know.
Who is this Adviser or investor you use? I lost over 35000 already this year, I’m in need of a planner going forward.
I'm cautious about giving specific recommendations as everyone's situation varies. Consider independent financial advisors like "Sophia Maurine Lanting" I've worked with her since the pandemic and highly recommend her. You can check if she meets your criteria.
These frequent tax code changes are disrupting my long-term investment strategies. Are there ways to structure my investments to be more resilient to potential tax code modifications?
I honestly think America needs a completely restructure of their political system. It is just not working. Trump and Biden being elected out of 300 million people to run the country is evidence for that too.
This is why the US should elect more progressive politicians, who know how to manage budgets and give us (yes, pur country's initials literally spell out that pronoun) much better tax credits in return for better public education and better public healthcare. but since these are nonexistent, my husband and I are being guided to finance our retirement and healthcare through a diversified investment portfolio
@@hasede-lg9hj How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?
How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?
Annette Marie Holt is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.
Another informative episode, Dianne, thanks. I've just retired and taken my 25% and put it in Premium Bonds. Though considered not the most efficient option, I've been happy with the return on my NS&I accounts over the past few years. My main reason for taking my money, though, was that, like others, I believe there is a good chance the Labour Government will reduce / remove the tax free opportunity.
Which bonds did you take? I am thinking of putting my 25% on the Guaranteed Income Bonds
@@haalstaag Hiya. I used part of my money to top up my Premium Bonds, and transferred some to my wife for her to set up a Premium Bond account. She has also got a Guaranteed Income Bonds account at the moment, and I had one last year. Think it just depends on which account the individual wants to choose. If you want best guaranteed return, then probably the Guaranteed Income Bonds is your best option. I've actually done ok with my Premium bonds, winning between £25 - £400 most months. Think this is because I sometimes cash in the Premium Bonds I've bought in smaller amounts, and re-invest as a single large sum. Believe this gives me a bigger single catchment group of numbers rather than lots of smaller isolated ones. Hope this helps.
Nice video Dianne, a few years ago I was planning my retirement and had the thought I’ll take all my tax free in one go, then invest it. At the time it was about £50K from DC schemes and £50 K forecasted in a DB scheme.
Watching various you tube channels I’ve realised that would not be a tax efficient method of accessing the money, or a good way when the DC scheme was growing faster than other investment areas.
At present there is no mention of the tax free portion on DB pensions, but my simple view is
1) the money in the pension pots is invested tax free, so yes understandable to tax it when accessing it if it exceeds personal tax allowance.
2) the tax free lump sum is a bonus to attract people to save into a pension. Currently the max at £267K is a very nice pot if you have over a million in your fund ( I wish) even if it’s capped at £100K you have not paid tax on this money.
3) I am more annoyed by tax being due on savings where you have already paid tax on the money eg £20K in a bank account at 5% attracts tax, WHY? I would like to see exactly how much that generates for the government each year.
Sadly while pensions are great saving tools the education of their benefits and tax efficient ways to access the funds is very sketchy. Currently you get steered towards a pension wise free 1 hour telephone call on decisions that could cost you thousands
The problem is, none of us knows how long we're going to live after we retire, so don't know how long our pension pot has to last or how it will be affected by changes in legislation.... assuming we can afford to retire in the first place, and that the retirement age doesnt keep getting increased (UK resident here)
Sound advice as ever, Dianne, thank you........( you could make great asmr videos with that voice too ) 👍
I have never understood why you would want to take the tax free cash upfront, unless you're paying off your mortgage (which you should have paid off years ago). If you don't take the tax free cash then you will also get 25% of your future growth tax free as well, so lots more tax free money will be coming your way in the future.
Just as long as the current Chancellor doesn't raid pension pots....as has been mooted.
Paying off a 4% mortgage early is probably the worst financial mistake you can make. Money in the stock market averages 8-9% per annum. A mortgage is the cheapest money you will ever likely borrow
Take out 25% tax free lump sum makes every sense. Time it around January time so can max out 2 investment ISA years (only put emergency funds in cash and never use an isa for this use bank savings accounts where interest in generally better too).
Unless you want to work until 67? A 25% lump sum can allow you to retire early , build a new business, change career, help out family, etc .
POTENTIAL future growth. You could end up with a future loss, then you’ll wish you took the lump sum. That’s why my biggest reason to take the lump sum is to diversify my retirement portfolio
True and for many it is the only time they will have an opportunity to have a large pot of reserve cash.
As many are financially unaware of their options, think investments are for others they will happily take their 25% as soon as possible put it into bank accounts and pay tax on it. Even if it goes into an ISA they’ll pick a cash ISA with poor returns but a secure savings pot rather than a stocks and shares ISA with potentially much better returns. Some will even take annuities virtually guaranteeing at least 20% tax will be paid.
For Labour if 50% of those looking at DC pots take their tax free sum early ahead of the October budget it will be a win for them as the money will no doubt attract tax when the person deposits it somewhere
I am constantly surprised by the naiivity of so many people. There is FUD (Fear, Uncertainty and Doubt) around the government's plans for every budget. Recent years included capping ISA contributions at £100k. It's a deflection tactic - stir up uncertainty about one aspect affecting many people, so that when that issue does not come to fruition, everyone breathes a sigh of relief because the things that were announced are slightly less severe. The concensus is "it could have been worse"! This is not a party-political comment, it is a generalisation.
Being close to retirement I am more worried about the forthcoming budget than any previous one. However, reading your point made me think back to when a company I worked for announced employee pension contributions were increasing from 8% to 11% and there was a huge sigh of relief that they were keeping the DB scheme (although that has been closed to accrual far more recently).
@@MrDuncl Understood. I guess the issue this time is that previous statements about not increasing taxes for working people have, as a consequence, focussed attention on investors and non-working (primarily retired) people as the targets for tax increases. Personally, I think the size of the voting population that is retired will present too great a risk at a future election for the current government to attack pensions too aggressively because it will come back to bite them. Pensioners have the longest memories!
Loving the music at the end dianne👍
Take it before Labour decide it's going to be taxable! Oh yes it's on the agenda.
Can you do this again after the 30th October…..
Paid off mortgage and deposited balance into ISA. Fed up with funding an IFA, fund managers and fund administration costs. Time to take back control from the potential of meddling governments!!
There's nothing to say they won't meddle with your ISA, what you have now or what you intend to save in the future.
@@kw8757 nothing at all but it’s now about having to act quickly.
@@kw8757yes will ISA retain 100% tax free status?
On Thursday/Friday last, the IFS implored the Chancellor to reduce the pension tax free sum from £268,225 to £100,000.
I imagine if you are able to utilize the maximum you should do so.
But first. I would argue that the IFS are wrong for the following reason.
Reaching towards your retirement you may want to buy a more suitable property in a location that is favorable for retirees.
The £268k figure is approximately the average price of a property in the UK and could easily be funded by the maximum tax free sum.
However, £100k will ensure more pensioners stay put.
With Starmer unwilling to offer any guarantee that pensioners travel permits will remain and with many councils in England facing insolvency, Labour look likely to increase a raft of taxes and lower thresholds, especially the tax free sum during the budget.
As it happens I think it unlikely any changenwill occur to the travel permits, at least not this year.
The other major change that is likely, is to do with pensions inherited as part of an estate.
These are currently tax-free but is the easiest thing to change making them taxable at death.
It really is open season on pensioners.
Last year the 'free' BBC TV Licence for over 75s was withdrawn cost so far £159+£170 or £329.
This year the Winter Fuel Allowance; confirmed. Cost £200 or £300 but add the increase to the energy price cap at £150 and that makes it a maximum of £450 for over 80s.
And (speculated) pension tax free lump sum reduction to £100k from £268k AND pension being taxable on death.
Add to that a (speculated) council tax increase of at least 10%.
Happy New Year.
You can only get £268k tax free if you have just over £1M in your pension fund, an amount that only a small minority of pensioners will have. The removal of the Winter fuel allowance is insignificant in the grand scheme of things.
If they reduce it to £100K for many that is still probably the largest pot of cash they will have ever had
Some people do move on retirement not out of the area they live in but just to downsize and pocket the difference (plus probable lower ongoing costs).
I can see council tax rising for many and of course this falls into one individual per house, there is already talk of single person discount being removed. An overhaul is required of council tax and for me something similar to the poll tax where everyone over 18 should be paying needs to be considered.
We hear the tax free lump sum will be attacked, but what about for DB schemes as it’s not 25% of the fund value in a DB scheme it’s a more complex calculation I believe. My forecasted DB tax free sum is more than 25% of the CETX values I was quoted
@@guyr7351 Not everybody can or is able to downsize.
@@tancreddehauteville764 Lots of people I know here in retirementsville have downsized. It is the reason I think equity release is such a bad idea.
I'm taking small monthly amounts of tax-free cash from my SIPP via UFPLS. No point in taking it all, since I don't need it right now and I would only end up paying tax on it in the bank...as stated, much better to leave the pot to grow (hopefully!).
Note: If you take monthly UFPLS withdrawals, be careful which day of the month it gets paid. I just got taxed for September since I withdrew the money in the same tax month (period 5) as August by mistake! I know HMRC should sort out any overpaid tax eventually, but it's annoying since 1 day later and I wouldn't have been taxed on it!
Yes but Robber Reeves has got her eye on it.
The budget isn't until October.....
@@pip1723Yes , however the IFS has already proposed the reduction to £100k and it takes time to consolidate and arrange pension withdrawals.
Well she can take it off it too
🥱
Exactly I took mine in case the govt changed their mind as I didn’t trust them to maintain the 25% allowance for the next 30 years.. I’m getting 5.15 % on it for five years and I’m just living on the interest and not taking any pension. As the first 17k of interest is tax free per year and it earns me about 20k per year so I only pay £600 tax .You are totally correct , long term, just taking it out is not the best decision long term, as it affects the growth of the bulk pension.
Something doesn't add up here. To generate an annual income of £20k at 5.15% requires a capital sum of more than £388k. That is way higher than the maximum permitted tax-free lump sum, so there must have been other savings as well. It also suggests a pension pot of at least the previous Lifetime Allowance (more than £1m). That is way beyond the wildest dreams of ordinary people but well done for locking that in at more than 5% for five years.
I thought it was £1000/£500 on interest tax free - where are you getting £17k?
@@thepropertyflipper I presume they are including the £12,570 personal allowance but even then something doesn't add up.
There may be a reason to take the tax free lump sum if Labour decide to reduce it or curtail it altogether.
Got a Feeling that the Budget this Time Round gonna be a Disaster for Everyone...........
Where are they getting this £100k from anyway, has it been leaked or something?
@@JustinUK it has been recommended by the IFS. They said it would affect 1 in 5 but almost half of those had been employed in the public sector.
I took some PCLS end of March this year to fill this year's S&S ISA. Very glad I did considering Reeves is now on the war path.
Take it before labour decide it's going to be taxable!
My colleagues seem to be retiring to get their hands on the Tax Free cash despite having no plans of what to do with it. I just hope that on October 30th they aren't shown to be the wise ones while I am still adding (significantly) to my pension in my sixties
If you have a private pension you don’t need to retire to take your tax free lump sum, you just need to be 55
@@farab4391 The people I am talking about have 30+ years in a DB scheme. Even with a private scheme unless you have plans for using the money to pay off your mortgage or similar the interest on a lump sum could mess up your taxes. I'm currently piling money into an AVC to avoid higher rate tax.
If you have moved abroad before taking the 25% tax free, will you still be entitled for the 25% tax free when the private pension age has been reached?
Are the UK government planning to get rid of the 25% tax free allowance? Really hope not as I have planned for years to use that on retirement
Well in July a labour spokesman said they aren’t going to touch it ….. I don’t think labour and Starmer would lie to us and flip flop ….. ooooh hang on 🤔
Doubt it. It's the one aspect of private pensions that everyone seems to know about so to abolish it would cause a lot of upset across the board. The anti-Labour press and associated "Influencers" on RUclips etc are pushing the suggestion but there's no evidence for it. Just speculation.
@@Desmond.TuTu. I expect them to go back on many of the promises they made pre election, thats why they have invented the £22 billion fallacy.
Plan to be poorer post budget, no matter how poor or well off you are.
for years we see people when it’s the budget waiting to see what they are going to get out of it, as this is the announcement of how the Goverment is going to raise its income my attitude has always been how much is it going to cost me.
Will Labour attack the tax free lump sum? Will they reduce its limit eg £260K down to £200K or less? Or maybe reduce the % allowed?
The money in a DC has had tax relief to help it grow the tax free part has always been a bonus.
I have one DC scheme that I’ve accessed already so only about £25K tax free left. Yes it will be great if that remains and I don’t think Labour will scrap the tax free amount entirely.
I wonder if they will go for the tax free amount in DB schemes? As a lot of the public sector have this type of scheme
I did see it suggested somewhere... And, given the current financial climate along with Labour's tricks so far, I'm please I retired last year and took my pension.....
If I retire at 60, take 250k tax free and put it in the 'bank', then sure I can take 3k out of that per month for 7 years, essentially meaning I've a 3k tax free income until 67. Assuming I don't need more than 3k per month in that period, I'd start using the remaining 750k at 67 + state pension, and get tax normally on whatever I take out.
Does that not make more sense than an annuity? I see a lot of people buying property abroad in the thread, but I think I'd just rather remain as tax efficient as possible and travel 6 months out of the year. Sound realistic?
Leaving your tax free cash in a standard workplace pension ( which most people have ) does not guarantee a better return than a cash ISA. Both options need to be investigated and invested wisely to maximise returns.
Why take it and put it in bank account? Even if they reduce the limit still makes no sense at all. If you take it use it ( pay debts mortgage buy holidays renovate house etc) or don’t take it at all!
Yes use it but for many it is the only time they will have a chance to have a large easy accessible pot of cash.
Many have no idea you can flexibly withdraw from DC fund taking 25% each time tax free,
They have no appreciation you can just leave the DC scheme untouched and so growing until you need it. All within a nice (currently) tax efficient scheme.
Scaring the population to withdraw their TF amount now and put into the bank/building society means once over £20K goes in a 20% tax payer will be paying tax on it , kerrching for the Government.
I potentially could take all my TF lump sums and pay off my mortgage, but why use money that’s growing at 4X my mortgage rate to pay off the modest mortgage amount and take away the access to a lump sum should I need it.
Even if TF lump sum is reduced to £100K that for vast majority is still a nice amount t to have AND people need to remember no tax has been paid on the money in a DC scheme
I am due 100k+ tfc from a db pension in 10 years. It reduces the pension to 17k a year. I can easily live off that plus the 100k, my state pension and other investments for at least 20+ year IF I survive. By which time I will not have energy to live properly. Why postpone it just to get a bigger monthly payout? Life could end at any time.
Have a look at your DB scheme rules. Many say that once in payment the maximum increase is 2.5% a year. There is no triple lock in DB schemes
Was only a matter of time before the Government wanted their share of your pension....
The time is Here or will be soon 😭😭😭😭😭😭
Totally agree.
I needed to buy a property to live in
Spot on as regards a DC pension, but there are other factors for DB pensions. Many UK public sector pensions also have different circumstances
Like a maximum increase of 2.5% a year once in payment as specified by Government legislation in 2005.
Fewer workers + more retired people = higher taxes
The number of people I know who say they are going to take the whole 25% in one hit makes me laugh, when I ask them what they're going to do with a large sum of money, how they're going to invest it and shield it from tax and inflation, they look at me like I've got two heads. They haven't even considered it for one second.
But what if she removes that option?
You'll understand fully why come 30th October!!!!
@@se3059 I cant see the unions allowing it on the public sector pensions. But if she only does it on the private ones there will be merry hell.
@@se3059 No, doesn’t apply, these are people who are nowhere near 55/57 so it won’t affect them for years yet. I’m just highlighting the ignorance of some people who just want the whole 25% without considering the possibility that there are better options.
@@SuperRipper1888if she is only going for DC schemes it won’t impact many of the public sector as they have DB schemes
I’m going to take the lot, and spend it! Fix the house up, even down size, then Holidays, cruises, travel. If you have money when you’re old and decrepit, you’ll pay for every thing. Put my property and any residuals in a trust for my niece.
“Trust” is the important word in what you have said 👍👏
*Amazing video, you work for 40yrs to have $1M in your retirement, meanwhile some people are putting just $10K into trading from just few months ago and now they are multimillionaires*
Are they really? Thats not the real world. Anyone who believes in get rich quick schemes is going to be very disappointed and broke.