APPROACHING
What happens at age 55?
When you reach 55, you can gain access to your pension pot, should you
choose to.
However, the state pension is not available to you
until you are 65 for men and 60 for women (these
ages will rise to 68 over the next 25 years in a series
of stages).
Although this seems appealing, it is important to be
aware of the risks of accessing this money too soon.
If you’re still working, it makes sense to carry on
adding to your pension fund without withdrawing
any money from it unless you have to.
From the age of 55 to your retirement, your pension
pot will still have the chance to grow substantially
and your income will be at its highest, so this is a
critical period for hitting your pension goal. Taking
money out of your pot at this stage is unlikely to
help in later years.
Key points
If you have saved enough, you can retire
Remember, it has to last a long time and
withdrawing more than 25 per cent of your
pension pot will have tax implications,
particularly if you are still earning.
At the age of 55, you can withdraw 25 per
cent of your pension fund tax-free
There may be some sense in using some of your
retirement pot to invest in other assets such as
property, to diversify your risk, but remember the tax
aspects as any withdrawal over the 25 per cent taxfree threshold will be taxed as income (on top of
your current income, if you are still working).
You can diversify your portfolio by
investing in other assets such as property
If you really have planned ahead and have built up a
substantial retirement pot, then there is no reason
why you can’t actually give up work or move into a
lower stress environment, but check that you have
sufficient money to last an extended lifetime (see
planning tools section on page 34).
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You can also access the rest of your pension
savings, but there may be tax implications
Keeping your money invested and putting
more in from the age of 55 through to
retirement is likely to see the biggest growth
period in your funds