What Will You Do With You Pension Pot When You Retire?

Something that we never think about during our 20’s and 30’s is retiring from work and that is rightly so. Why would you even think about something that is still years away? However, the years fly by and before you know it your children have left home, got married and made you a grandparent. This is a perfect time to start slowing down with work and spending more time with the family. 

How well prepared are we for retiring? Is our pension going to be enough to fund our life once we have stop working?

Pension laws changed in 2015 and this is something that has been very beneficial for lots of people. One of the main changes was to give people pension freedoms. What does that actually mean? If you are aged 55 or over instead of using the fund to buy an annuity which pays you annually which of course could suit some people, you can also take the entire fund. The first 25% would be tax free and the remainder is taxed as if it was income at normal tax rates. 

Here are a few ideas of what you could spend the money on if you decided to take your pension early in a lump sum. 

1. Holiday 

Having the holiday of a lifetime is never easy when you are working and when you are raising a family money can be a bit tight. So why not take a holiday with your partner that you have been promising to do for years. A holiday of a lifetime you will never forget. 

2. House Renovation 

When you’re young and bringing up a family and you buy a property you don’t always have the extra money to renovate your home the way you would like it, but if you decide to take your pension at 55 maybe you could get that conservatory you always wanted or a loft conversion with a new bedroom and en-suite. That will be pure luxury. 

3. Grandchildren and Family

If you have been lucky enough to have become a grandparent this is the perfect time. Well, quite simply you can spoil them rotten and even take them on holiday. Maybe you could also help out your family with some new things for their home such as a new sofa or a television. 

4. Investing your money 

It could of course be a lot of money and it might be wise to set aside a percentage of the money to invest and hopefully the investment will yield a good return to give you a form of income. It could possibly be enough money to buy a property which you could then rent out giving you a monthly income. 

It’s very important to pick the right account for your retirement which is where a ROTH IRA calculator will help you choose correctly.

If you decide to take your pension when you are 55 years old what would you do with the money? I would love to hear in the comments below.