Retirement cash — 3 ways to live more comfortably

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Posted on: 30 October 2018 by Amy Smith Brown

One of the biggest retirement woes is whether you’ll have enough savings to prevent you worrying about bills and enjoy treats like holidays.

Last May, Royal London reported that Brits now need at least £260,000 to retire without money worries — a hefty sum indeed.

But help is at hand if you’re not retiring rich— here are three ways to live more comfortably in retirement.

  1. Equity release

Your home might be your greatest asset and there are ways to access some of the cash tied up in it without selling up.

One of these is equity release — if you’re over 55 with your own home, it might be worth consideration after talking to a qualified financial adviser.

The most common equity release mechanism is a lifetime mortgage — this allows you to get hold of some of the value of your home as tax-free cash while retaining ownership.

You can use this lump sum for whatever you like and the loan and interest accrued roll up and are repaid when your home’s sold when you and your partner pass away or move into care.

Tip: Read this advice on equity release from the Money Advice Service.

  1. Pension freedoms

Prior to the Spring 2015 Budget, limits on pension drawdown meant that retirees usually relied on buying annuities that paid a guaranteed income that was fixed rather than flexible.

But following the Pension Freedoms that budget introduced, anyone aged 55 or over can access the whole of their pension. No tax is usually payable on the first 25 per cent and the rest is taxed at income tax rate.

Your pension pot strategy depends on your circumstances. You can leave it untouched and hope that it grows, take 25 per cent tax free and use ‘flexible drawdown’ to take more income when needed, or take the 25 per cent and buy a quality annuity.

Tip: Get more information on personal finance from Chancellor Financial Management.

  1. Part-time jobs

Starting to work again when you’re retired might sound strange.

But there are flexible part-time roles that pay well and are intellectually stimulating.

For instance, serving on the committee of a regulatory body can be very lucrative.

You’ll use the experience gained over a lifetime in a particular profession to make judgements on professional conduct issues or provide advice on implementing educational strategies.

Your wisdom will be welcomed and it’s an excellent opportunity to keep in touch with a specialist sector and form friendships with fellow professionals.

Tip: You can apply for committee member roles on The Guardian Jobs site.

Seek sage advice before committing to any retirement plans, but one of the three plans above could be the key to unlocking a more comfortable retirement.

Are you sitting comfortably in retirement? Share your advice in the comments section. 

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But following the Pension Freedoms that budget introduced, anyone aged 55 or over can access the whole of their pension. No tax is usually payable on the first 25 per cent and the rest is taxed at income tax rate.


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