The 3 Big Pension Mistakes EVERY Retiree Makes (Real world examples)

Taking tax-free cash is not tax-free if it means you have to pay more tax in the future!

Financial Planning

DISCLAIMER:
This channel is for education purposes only and does not constitute financial advice. Any opinions or assessments expressed are James’ own opinions or assessments, which are not affiliated with any third party. Any representations stated as facts or views based on such facts are relevant to circumstances applicable at the time of publication. This information should never be relied solely upon to make decisions, and James accepts no liability for any investment actions undertaken by viewers. Please seek regulated financial advice or an advisor if you require assistance. The value of an investment and the income from it can go down as well as up and investors may not get back the amount invested.

00:00 Intro
01:06 Tax-Free Cash
07:05 Defined Benefit Pension
09:59 Asset Splits

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[northstaffscountrywalks]

Thank you James. Superbly and clearly relayed to your audience. Over the last 14 minutes, the duration of your most helpful video, I've learnt more about how pensions and tax work than I've ever learnt reading through the bumf I was provided to myself pre-retirement age.

Now retired, but still well worth learning this stuff for my children, and their children too. Just subscribed to your channel fella for the sake of future proofing my family lines pensions, so again James, a big thank you to you.

[christinechandler]

I would like to see more videos about pensions for low earners who will be getting very modest amounts of money.

[pablob]

Hi James, another great video, thanks a lot!! Your examples are great to understand the tax implications and how to maximised your income at retirement minimising the tax impact. Many of your viewers are probably considering retirement outside the UK, as I do. Although you will not be able to cover every possible country, it would be great if you could explain which tax implications we should look into if we decide to retire in a EU country, from the UK tax point of view, and which tax factors we should be looking into the country where we want to retire. Thanks!

[AndrewDixon]

This is the first time these options have been explained in a manner I can easily understand. Great video

[NancyHampton-cnhh]

I love your videos - I think I’m reasonably knowledgeable (for the average person!) on personal finance but you really demonstrate in each and every video both something new and the benefit of getting a real dedicated professional involved.

[wgj]

This is a good video and it makes you think how you should plan your pension contributions and drawdown between partners to limit the amount of tax. If one partner is unlikely to cross the tax threshold to 20 % in retirement then invest in a pension for that partner and get the 20% tax free allowance. No mention is made of Isa, s you may have paid tax on the sum invested but after that its tax free.

[M]

I need to keep looping back to this every few weeks, makes my head spin!

[neilarmstrong]

Really excellent video!!...if only more people were aware of these pitfalls...it also demonstrates how incredibly difficult it is for the average person to manage their pension in a tax effective way by themselves.

[rogerexwood]

Interesting discussion, but not the only way to look at it. The starting premise that I agree with is that it is never a good plan to draw income to the extent that you pay higher rate tax on it. My intention is however to only use regular income to pay basic bills like food, heating, petrol etc. and on that footing £30-35k pa before tax should be enough. Anything fancier, like the long haul flights mentioned in the video, get funded by carefully controlled capital drawdowns from my ISAs.

[andy]

Great content and clearly presented, thank you!

This has been a help in fine tuning our retirement plans.

[tonycromby]

this is a brilliant video, i have never seen anyone talk about being tax efficient in retirement, well done!

[stevenjackson]

Just had this video recommended by the algorithm. I would like to think I'm pretty financially literate (paid off my mortgage early and made large pension contributions when times were good), but I definitely learned some new and useful stuff from you. Subscribed immediately, and I look forward to exploring your past videos as well 👍

[Neklank]

I must be the rare person that still found the video complex. Pensions are an absolute minefield, well finance in general for me. Perhaps I need to play it back a few times to wrap my head round it :)

[JamesShack]

If taking tax free cash from your pension causes you to have to pay more tax in the future…it’s not tax free!

[AmandaJYoungs]

Wow, this is an exceptionally good video! I've recently had to make decisions about my own pension and I realise I should probably have watched some more of your videos first! (It's just one person to consider, though, and not much pension.)

[timmitchell]

Just found your channel, and I must say your videos are excellent.

Minor point on item three in this video, you neglect to factor in the benefit of compounding investment growth for tax relief for the higher rate tax payer. Appreciate this adds another level of complexity, and this is offset by potential LTA as well as the already mentioned drawdown tax implications.

Your videos have given me food for thought in more detailed modelling of my own household situation.

[BlackBuck]

Glad you pointed out sharing unused personal allowance. Works for me as I'm still employed while my wife draws a pension.
I understand that once you draw from a pension you can only then make a certain amount of contributions to a new or existing plan, and only out of income as you're not allowed to recycle funds.

[gnipz]

Another fantastic video James. This is an angle I've not seen explained ever and it's certainly got me thinking

[clivedyer]

It’s one thing knowing that stuff but delivering it in a logical and understandable order is very impressive

[edwardhughes]

This is a really valuable video James, all your videos are great, but this one really stood out for me - thank you, keep them coming!