Should You Take Your Tax Free 25% Pension Lump Sum at 55?

FUTURE PROOF: Thanks to pension freedoms you can now access 25% of your pension pot tax-free at 55 - and figures show many retirement savers are withdrawing their cash.

Morningstar guest: Richard Parkin, Head of Pensions for Fidelity

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[AnnaOllsson]

if the idea is to build an income stream to use as complement for retirement, or at any given point if needed, then building a dividend growth portfolio always buying adding to it could be a good and peaceful path. On the long run consistency and perseverance could guaranty the desired income stream goal with little worries

[jessicasquire]

In the 1990s I sold pensions on the strenght that the tax free lump sum would pay off most if not all of the mortgage and leave the investor with a pension for life. Most were over a 40 year term plus, I was not alone

[modernsaver-kmex]

As soon as I get the chance, I’ll be taking out the 25% and putting it to work in a different area. Maybe even drop it into physical Gold and sit on it until it’s needed

[mariewilson]

*Do not just seat and do nothing when an investment opportunity comes. Most millionaire investors you see and admire today, didn’t make it by wasting time or waiting on others before investing*

[amandahunter]

I think one thing we've all learnt from the pandemic is to live much more in the moment. We might not be around to enjoy our old age, and these investments might not perform in future in the way we hope anyway. So, if there is an opportunity to take some retirement money earlier to buy or do something we'd really benefit from or just take a break from working to study or have fun or to help a family member or friend, then may as well do it.

[gumusluk]

I'm 57 and a half...I'm looking forward to taking my final salary next month. The early retirement reduction was minimal for me. If you're around 57 now I'd take it now.

[MrMrp]

I will be taking my 25% at 55 which will serve as a double bonus; 1. I will use the money to pay off my mortgage, thus leaving me much better off monthly until I retire. 2. It will reduce my pot and I won't pay 55% tax on future withdrawals because I would exceed the life time allowance.

[jamesbentall]

Utter bollox they want you to leave it in and die before you take it . Take the lot as much as you can as early as you can

[welshhibby]

My 25% will be spent on my accommodation when I retire.

[bobbob]

I will get a spongy job, already have one, and probably work till 67 tbh, once I get to 60 it really is not that long, a spongy job something that involves sitting and giving people tickets or something, or a job where you can just tell people to fuck off

[kennybeckett]

Take your money as early as you think possible and enjoy it .You need to have less than £16000 at 66, 67 years you will get most thing payed for example your care fees, rent allowance etc.having plenty of money at the end not a good idea the government is very good at clawing your money back to them.Come in with nothing and go out with nothing.

[Evoque]

Don’t listen to these experts .. of course they don’t want you to take cash .. that’s how they make money. Do you want to be the richest man in the graveyard? Enjoy your life

[alanbutler]

This guy is not a qualified adviser, he works for a company that has an interest in retaining your funds!

[richardignatowicz]

I was thinking of taking money at 55, after listening to this, think I will take pension 57-58 now, thanks.

[peterjackson]

Fidelity need you to keep your money with them otherwise they need to make some fund managers redundant

[mellowmarkable]

His voice sounds a bit like Alan Partridge :)

[issiewizzie]

taking no risk ...you may not leave to enjoy your pension...

[FarrukhA]

State pesion retirement age is going to be 68 yrs for lot of people in future in UK & the only option is your workplace pension. I'd say anywhere between 56-58 yrs is good, so you get to enjoy a bit when your a bit healthier & can do something with the 25% tax free cash & leave the remainder invested or take all of it (get taxed on remainder 75% as well but you can invest elsewhere not using all in one go). No point leaving longer invested & seeing yourself grow old with it :)

[mcnunn]

It is always assumed that people take the 25% and spend it rather than invest it in similar assets. It would have helped to go into more detail around the crystallisation rules and tax implications.

[timwood]

Why would you leave money in when you could put £20k of it into ISA (possibly £40k with partner) and invest the rest in std investments and get £12k CGTA (possibly £24k with partner). Surely you must take it out, just don’t spend it. Am I wrong?