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Tips for spending your pension pot wisely

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Your pension is one of the most important investments you’ll ever make. The amount you save sets you up for a comfortable retirement and is in many cases essentially your life savings. While employee auto-enrolment will now ensure you receive a fair pension in retirement, it’s up to you how to make your money last.


Consider your situation

There are many important factors that you should take into consideration before looking into spending your pension pot, such as:

  • Your age and health
  • Financial dependents
  • The size of your pension pot
  • Any other forms of income/savings

Make a budget

After taking your personal situation into account, make a budget of your income and outgoings. Setting a realistic spending limit by week or month will allow you to live comfortably in retirement. It will also allow you to remain fully aware of your financial situation, taking away any money worries.


Unlock your pension pot

The law currently allows people aged 55 onwards to access their money early. This is known as pension unlocking. With 25% of your pension available tax free, you have the option to invest this money before you retire, cashing it in when you require it.

Pension unlocking isn’t suitable for everyone and you must be aware of the risks before making a decision.


Invest in yourself

If you make the decision to unlock your pension, an annuity may be a wise investment. An annuity guarantees a regular income for the rest of your life, which allows a steady income without the worry of your pension pot running out.


Beware the risks

Some people are tempted by riskier investments that promise higher returns. While these may be suitable options if you’re experienced investor with a large pension pot, some unscrupulous advisors are mis-selling investment products.


If you have invested in a pension scheme that lost money and you weren’t aware of the risks, you may have been mis-sold the product. Get in touch with us today and we may be able to help you claim compensation.