After a lifetime of saving and investing, the questions of what to encash and when to do so become of increasing importance. That’s one of the reasons why we’ve commissioned a guide to help readers plan for their future. To learn more about savings and Investments, and how the over 55s need to consider these issues carefully as part of planning for retirement, read the fourth chapter of the independently written Guide to managing money for the over 55s, sponsored by free2. Or, tune into the Podcast series – free thinking finance – that accompanies it.

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Guide to managing money for the over 55s – Chapter 4

Naturally, the essential motivation behind saving and investing over many years, is to create a secure future source of finance available to call upon as an income or a lump sum when you need it. However, as the events of 2020 have shown, if you do need to draw down some of your savings and investments, timing is rather important. If you are invested in stock markets, then market timing may define if you are selling at a profit or loss.

Aside from market movements, there are also charges and taxes to consider when encashing your savings; some savings may be held in notice accounts, which require advance instructions of withdrawals without loss of interest. Savings held in ISAs can be withdrawn tax free, whereas other savings may add to income and end up being taxed at your highest marginal tax rate. However, the tax applicable and charges associated with releasing a particular investment might not be the only factors – there could be wider objectives to consider such as inheritance planning.

A little guidance might help

At free2 we have commissioned an expertly written Guide to managing money for the over 55s, which goes into these issues and more. For example;

  • When is the right time to be selling investments?
  • How does the timing fit with your objectives? That could depend on various factors, including the objective behind your original plan.
  • What other funds have you built up? Do you have enough funds available to cover necessities?
  • If you’ve been investing over a long time, you might perhaps have missed a recent stock market peak, but your money may have grown significantly from your initial investment; so is it wrong to take a profit? You may wish to seek professional advice.

The tax factor

As we said earlier, when it comes to savings and investments, there are a number of taxes to consider, along with tax allowances; these include income tax, inheritance tax, capital gains tax, and lifetime allowance tax charges in relation to your pensions. Understanding tax allowances and having a plan of action to structure income and utilise tax allowances is vital. This is where you may well wish to seek independent expert financial advice.

Retiring with confidence

As we approach and enter retirement, unknowns and unforeseen events can loom larger in our consciousness. Which is where many savers often seek to ensure an accessible pot of money as an emergency fund for the future in case of something going wrong – a figure that is often quoted is three months’ worth of expenditure, as a minimum.

Another way of looking at funding retirement is the ability to utilise any assets you might have to generate income; selling a business and taking income from buy-to-let properties, being two well-known examples.

The Guide to managing money for the over 55s goes into these sorts of issues and many more, and is complemented by the Free thinking finance Podcast series, sponsored by free2. If you’d like to read more about these sorts of issues or listen to the Podcast, then please choose from the following options:

Important Note

Free2 Limited (trading as free2) is an Appointed Representative of RS Consumer Finance Limited (RSCF) which is authorised and regulated by the Financial Conduct Authority (the FCA). free2 is a credit broker, not a lender, and will only offer loans from RSCF – an offer of credit is subject to status and affordability. Example Loan: 60-year-old non-smoker, £30,000 over 10 years with fixed monthly payments of £344.56, interest rate 6.73% and an APR of 6.97%. Terms & Conditions apply.

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