Five Essential Tips for Retirees to Extend Their Income
Retirees urged to follow these five simple tips to make their income last longer
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As retirees face increasing living costs and longer lifespans, experts from The Pension Planner offer five strategies to help manage pension savings effectively. These include maintaining an emergency fund, considering inflation, deferring the State Pension, understanding new Inheritance Tax rules, and optimizing withdrawal timing to minimize tax liabilities.
- 01Retirees should keep an emergency fund equivalent to six months of expenses but avoid excessive cash holdings due to low returns.
- 02Inflation impacts purchasing power, necessitating careful planning of pension withdrawals to avoid depleting funds too quickly.
- 03Deferring the State Pension can increase future payments, with a potential increase of 1% for every nine weeks of deferral.
- 04Unused pensions will be subject to Inheritance Tax from 2027, prompting a reassessment of estate planning strategies.
- 05Strategic timing and order of withdrawals can help retirees manage tax liabilities effectively.
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With the rising cost of living and extended retirement periods, managing pension income is crucial for many retirees in the UK. Recent analysis by Standard Life reveals that nearly a third of retirees feel their living standards have declined since retirement. Experts from The Pension Planner recommend five strategies to help retirees make their income last longer. First, maintaining an emergency fund of about six months' expenses is essential, but retirees should avoid holding excessive cash due to low returns. Second, it’s important to consider inflation and market fluctuations when planning withdrawals. Third, deferring the State Pension can lead to higher future payments, especially for those who can afford to wait. Fourth, new Inheritance Tax rules will apply to unused pensions starting in 2027, urging retirees to rethink their estate plans. Lastly, managing the timing and order of withdrawals can help minimize tax burdens. By implementing these strategies, retirees can better secure their financial futures.
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These strategies can help retirees manage their finances more effectively, potentially improving their quality of life during retirement.
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