If you’re over 55 and trying to source capital to enable you to expand your business or invest in a new enterprise, you may be considering releasing capital from your pension. Before you make any decisions, it’s crucial that you speak to a financial expert or pensions advisor who can help you understand the pros and cons of each option for your individual circumstances. To get started, take a look at the following advice from Portafina on taking a pension at 55 and the main options available.
Aside from very rare circumstances such as critical illness, the earliest a person can access their pension is the age of 55. With the right type of pension, there are numerous actions that someone over 55 can consider taking. For example, you can enter into a pension drawdown scheme, which means you can make money from your pension in lump sums or via regular payments, or you could sell your pension to an insurance company. In this case, the insurers would pay you a regular income, which is guaranteed for the rest of your life. However, if you are looking to release a larger lump sum of money for business investment, the following options may be more suitable.
You don’t have to touch your pension when you are 55, and the majority of people do not take this option. Withdrawing money from your pension early may mean you have significantly less money for the future so should not be used as a quick way to fund investment without serious consideration. Leaving your pension in place until you are 60 or 65 you could boost your savings significantly and give yourself the best possible financial future. This is, of course, assuming that your pension has been invested well.
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