Tax Effecient Retirement Saving

How can an ISA and a pension help me retire earlier?

The State Pension age used to be regarded as 65 for men and 60 for women. Many employer’s pension schemes reflected these ages. This is no longer the case, but you can retire when you like as long as you can afford it. Alternatively, you do not have to stop working because you reach the State Pension age or start receiving a pension.

Many people like the idea of retiring early so that they can enjoy themselves and have more time for family and friends. However, unless you have an excellent pension that allows access to benefits before the normal scheme retirement age, funding a life of leisure can be a struggle.

Having flexible access to a pension can provide tax-efficient income to bridge the gap between stopping work and the state pension starting to pay out. In addition, creating a fund can be assisted by tax relief – a very worthwhile boost to retirement funding if you plan well.

Sometimes we are fortunate enough to inherit or have saved up a lump sum in savings. A way of maximising the usefulness of these monies might be to invest wisely using the tax-efficient wrapper of an ISA so that it is exempt from income tax and capital gains when you draw on it. The underlying investment might be cash (secure – but with notoriously poor interest), or equity-based which might be more volatile but historically should provide better returns over the medium to long term.

It is usually a good idea to spread investments around so that you don’t end up with all your eggs in one basket. As independent Financial Advisers we can check your existing portfolio or create a new one for you and help you make the right decisions helping you to retire when you want to.

For more details on our savings and investments plans and pensions, please call 01733 314553 or email us at