Drawdowns have received some changes recently in legal rules which may make these a great solution for you.
Drawdowns may seem confusing because of all the changes which have been implemented fairly recently. If you have a drawdown from previous to April 6th, 2011 you should speak with an Independent Financial Advisor (IFA) since you have the option to convert to the new regulations or otherwise opt for an annuity. For those of you who are just starting your retirement planning here are some of the new regulations:
There is no minimum draw required any longer.
The maximum amount you can draw has been reduced. The provider you’re considering or an IFA will be able to use the Government Actuary’s Department (GAD) tables to calculate what your maximum draw amount is.
The maximum income limit will be reviewed at least every three years until you reach the age of 75.
After the age of 75 maximum income limits will be reviewed each year.
There are no longer any age restrictions on drawdown.
After age 75 you may qualify for tax-free lump sums of cash to be distributed to you.
Here is some general information as well about drawdowns for retirement planning:
Drawdowns are not permanent and can be changed at any time to use for the purchase of an annuity if you change your retirement plans.
Drawdowns can be paid to heirs after your death.
Drawdowns are suggested only for those with a secondary and/or tertiary source of income.
You manage your investments with a drawdown plan.
Fluctuations in payouts and total amount available to you can cause funds to deplete early or result in lower income payouts. It is dependent on the market and type of investments.
Drawdowns cannot offer a guaranteed source of income for life.
Successful investments can mean a significant increase in monthly income.
Again, if you are considering a drawdown plan in your retirement planning; please do not hesitate to contact an IFA for assistance.
Get the facts about all your available options to pay inheritance tax.
The last thing you need while mourning a loss is more stress, but for a lot people that is the case when they find out they are responsible for paying inheritance tax. Inheritance tax can cost from 36per cent to 40per cent of a deceased person’s estate.
In the midst of tragedy heirs are suddenly faced with paying inheritance tax and have six months to pay unless they are granted an exception. Here are a variety of ways to pay inheritance tax so you can be prepared:
You can make a payment on the inheritance tax in the form of a Direct Payment Scheme from the deceased person’s bank account. This makes any necessary record keeping easy and efficient.
War loans, exchequer stock and treasure stock are all government stocks which can be used to pay towards an inheritance tax.
Premium bonds or other national savings investments that the deceased person owned can also be used towards the payment of inheritance tax.
In some rare cases, heritage properties may be transferred to the Crown as a unique way to pay inheritance tax. Some Heritage properties may also qualify for a reduction in the amount of inheritance tax which is due.
If you need a longer amount of time to pay the inheritance tax there may be other options available to you. You may qualify for paying through instalments over the course of ten years, or if you only need a little bit more time such as month, you may opt to simply pay the amount plus any accumulated interest.
There is paperwork which should be filled out before payments are made, and paying in advance is an option as well. Paid overages will be reimbursed later.
When it comes to saving money, it’s best to make the most of tax free savings opportunities
In today’s economy, whenever there’s an opportunity to save more money without having to be taxed, you need to take full advantage of it. ISAs, or individual savings accounts, are an incredible benefit for those struggling to build a nice nest egg for the future.
The current ISA allowance is £11,280, up from the £7,000 when it was first introduced in 1999. The benefit of the ISA is that you can save up to the limit without the money being taxed. This is a perfect savings especially for those who have the discipline to let the money stay undisturbed as it grows. As long as the money is not withdrawn it will not be taxed. Once withdrawn, however, it loses its non-taxable status.
If you choose you can invest the entire allowance amount in stocks or shares, or you can invest £5,640 as cash and the remaining balance as stocks and shares. It is important that you recognize that investing in stocks can result in loss or gain to the ISA account depending on how well or how poorly the stock performs in the market.
Investing in this manner works best when your investment is money that you can afford to do without for some length of time.
ISA’s differ from regular savings accounts because you don’t have the same easy access to withdraw funds without penalty. So, if you need that kind of access it is probably best to just use a regular savings account. But if you can be consistent and disciplined enough to allow your investment to grow, and continue to add to it yearly, you can save a great deal of money in just a few years.
ISAs offer an incredible value and opportunity, and it is one that should certainly be taken advantage of.
The fluctuating regulations and stock market are cause for concern to anyone who is conducting retirement planning.
If you are one of those individuals who diligently investigated the retirement possibilities ten years before you intended to retire, you probably had a vague idea of what you could expect from your pension. That may have changed due to differences in the stock market and changing regulations which are meant to offset the loss of the Greek economic downfall.
Many are even finding that their pensions are a lot less than expected which means people are faced with concerns about the best way to invest their pension to maximize their funds.
There may be other options such as working another job to try and put the money away for retirement which may change the future financial outlook for a person.
No one knows what the future holds, so it is difficult to decide whether or not to go out and spend another decade or so working at an additional job and learning something new, or if it is preferable to merely adjust the lifestyle to match the income.
There is no right answer for anyone, but a new type of financial testing may help alleviate some stress and give you a little bit of reassurance about where your future is headed. A Monte Carlo test can simulate a host of different economic possibilities from the absurd to the common so you can get a better idea of how your investments will weather financial upheavals and for how long.
This type of test can help you determine if everything is spot on, or if you might want to get that extra job now so you will have a less-stressful retirement. Independent Financial Advisors can also help you determine ways to best invest your money for the greatest return after your retirement.
40per cent IHT can be a lot for several people. If you’re one of them, here are some ways on how you can reduce this tax.
Inheritance tax (IHT) becomes an important issue when someone dies. This is a type of tax due on the deceased estate, which is valued above the set threshold which is £325,000. Any value over that threshold is subject to 40per cent IHT.
However, this can be reduced by 4per cent if more than 10per cent of the estate is given to a charity. When determining the amount of IHT, executors simply add the value of all the assets then take out bills, debts, and funeral expenses.
There are different ways on how to reduce the IHT and these are the following:
If you’re married or if you have a civil partner, your spouse or your partner can inherit your entire estate without paying for the IHT. He or she can also inherit any part of your IHT allowance that you were not able to use on your death.
Giving away gifts can also help reduce your IHT and reduce the value of your estate. While you’re still alive, you can hand over gifts or money in the form of potentially exempt transfer. However, keep in mind that if you die within seven years from the time you gave these gifts, they will still be added to your estate.
Giving to charity. As mentioned above, you can reduce your IHT by giving a portion of your assets to charity. For example, if you donate 10per cent of your estate to the charity, your IHT will be reduced to 36per cent.
A Perfect Resource for Adding More Pounds to Your Retirement Savings Portfolio
You’ve heard them. Story after story of people just like you and me who have lost their hard earned savings to a volatile market or scrupulous investors, and now there’s no money for retirement. Having alternative savings resources can make like anISA can make all the difference in the world.
Being able to protect your investments from taxation is one of the benefits of investing in anISA. UK adult residents have an ISA allowance of £11,280 per year, and can invest that total amount in stocks and shares if they choose. This gives them the opportunity to get a greater return on their investment if the stocks and shares perform well in the market.
A more safe ISA option allows them to split that amount between cash and stocks, with £5,640 allowed for cash investment and the remainder in stocks and shares. This lessens the potential for loss, but of course the flip side is it lessens the potential for gain as well.
The good news is that for the savvy investor who is disciplined enough to use the total allowance yearly, and allows the money to stay put for the duration, by retirement they can have a nice little nest egg put away plus any capital gains earned. For a person who has a 401k, IRA, or other retirement vehicle, this is a perfect sidebar account that can be designated to provide retirement income above and beyond regular savings methods.
It is important to take advantage of the total allowance available to enjoy the full benefit on an ISA. You will be rewarded for your efforts if the account is properly funded and managed. ISAs can be a lifesaver in a very unsafe economy. Expand your retirementportfolio by taking advantage of the power of an ISA today. Your future may depend on it.