One of the big challenges that people have is trying to figure out what they “might” come out with a pension when they retire, and the problem here is that this can be over a long time – hence the confusion. M A P has developed a simplified cash flow model which is usable as long as you use reasonable parameters – which is what M A P is here for.
What we can do for you is use your current value of pension and calculate annual growth of 5% a year (because we think that that is pessimistic enough) and so build up a total pension figure that we think is achievable at your retirement age. We then work out form this what we reckon you could safely withdraw form your pension fund each year – and this is your taxable income.
We invariably extract your tax free cash from the pension before we start doing this, because everyone is allowed to take out up to 25% of your total pension pot as tax free cash, and this is worthwhile doing because it gives people a cash buffer to fall back on and you can always take a regular income from it as well – with no tax implications.
Finally, we encourage clients to contact the DWP to get a pension forecast and this will tell everyone how much State pension they will get and when it starts.
Collecting all of this information together then allows us to show what kind of pension income you are looking at, and this then
- Helps you plan
- Monitors your progress to achieve your target/goal
- Is adaptable to changing circumstances
Moreover, we will then update that cashflow every year with actual growth achieved – and so allow you to keep on top of things.
M A P will do this for all clients that use our retirement planning service and that can help you plan, after all we are Money Advice & Planning.
The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority. For any enquiries, contact Andrew on 07957 836211 or enquiries@mapfinances.co.uk
