Just Retired? Five Money Matters You Need To Sort Out

Ok, so you’ve retired; you’ve left work and sorted out your Annuity surely now is time to put your feet up, have more holidays or spend more time in the garden or with the grandchildren? Of course it is, but there are still some financial matters you should take care of sooner rather than later.

1. Check that the right amount of tax is being deducted
Whether you have bought an Annuity, or decided that Income Drawdown was the best route, you should check that tax is being deducted in the right way. It has been known for HMRC (Her Majesty’s Revenue & Customs) to make the odd mistake. You don’t want to be paying too much tax, nor do you want to be underpaying and be left with a hefty and unexpected tax bill.

2. Should your savings interest be taxed
Talking of tax, you should check whether you are still liable to pay tax on your savings. When you were working you were probably a tax payer and therefore needed to pay tax on any savings interest you received. Now you have retired, it is possible, especially if you only have a modest State Pension, that you are no longer a tax payer and therefore do not need to pay tax on your savings. If that’s the case talk to your bank or building society and they will let you complete an R85 form to have your interest paid without having tax deducted.

3. Put your tax free lump sum away
Most people take the maximum possible tax free lump sum from their pension. If you have done the same and not spent it, you should make it work as hard as possible for you, at the very least it needs to keep pace with inflation or you are simply throwing money away. One option is to save it in a Cash ISA; this will increase the return because you won’t pay tax on the interest. Once you have ‘maxed out’ your Cash ISA consider other savings accounts, especially if you don’t like the idea of your capital rising and falling in value, as it will if you expose it to the stock market, which of course could produce better returns in the long run; although there are no guarantees.

4. Defer your State Pension?
If you have retired early you might want to consider deferring your State Pension, especially if you have surplus income. It might sound strange deferring something you have waited all your working life to collect, but for every year you do delay taking your State Pension you will receive an extra 10%, each and every year when you do finally take it.

5. Make a Will
No one likes to think about dying, but it will come to us all (as will tax!) you might as well be prepared for it. If you have not already made a Will now is as good a time as any to put this right, it really is the only way of you being in control of your estate.

Retirement should be fun
You’ve worked all your life, now is definitely a time for enjoying yourself, taking care of these little jobs now might mean you have a few extra pounds each month to spend on the things, or indeed the people, that you love.

Once you have finished work, done your pension annuity comparison, looked at your options, bought an annuity and sorted your tax free lump sum out you would think it would be time to sit back and take life easy. Financial expert, Phillip Bray, explains why there is still work to do.