Approaching fast is April 2015, when you could have even more freedom to decide what you want to do with your pension savings as you approach retirement. Whatever you choose to do, and it will be your choice if you qualify, think carefully and choose wisely. Seek advice before making a choice if you are not sure of the effects that might result. You have two broad choices that you can make – cash-in or hold on to your savings.
Cashing in: If you qualify, you might be tempted to cash in your pension. That’s understandable, particularly if debts are a concern – recent estimates show that nearly a third of homeowners after the age of 61 will still be paying their mortgage off. But if you’re really keen to get your hands on the cash, even if it’s just because it feels good to have the cash now – you need to think carefully about the risks and your longer term needs. After all, since we’re living longer, it might need to last for at least a couple of decades.
Preserving your savings: Cash is not always king if you’re keeping it for the long term. Certainly in an era of low interest rates and returns on cash savings, inflation can wipe off value. Without any improvement in interest rates, £30,000 could be devalued to just over £24,512 after 10 years, assuming you spend the small amount of interest you gain and the inflation rate is 2%. That’s why many people opt for investing in the stock market, when it comes to longer term savings. It gives you access to better potential growth. Worth taking the risk?
No wonder the recently opened and extended offer of ‘Older Person Bonds’ by the Treasury has attracted so much interest.
If you are looking to take more control and responsibility for your retirement savings planning in April, it is definitely recommended that you speak to an expert to get guidance on your own personal situation and a good idea on what will deliver the best solution for you.
Sources: www.standardlife.co.uk (Article: 2015/02/10)