Four ways to boost your retirement income
1. Keep tax bills to a minimum
The way you take an income from your pension will affect the amount of tax you pay, so it’s important to think carefully before you make any withdrawals.
If you decide to take out all the money from your pension in one go – you can take 25pc of it as a tax free lump sum – you will be charged income tax at your highest marginal rate on the remaining 75pc of your pension pot.
2. Consider deferring your state pension
The maximum state pension you can receive under current state pension rules is £159.55 per week. If you can afford to delay receiving your state pension, you can boost the amount you will get. Your pension will rise by 1pc for every nine weeks that you defer taking your state pension, which works out at just under 5.8pc for every full year you delay claiming it.
3. Top up your pension
If you have still got a few years to go before your retirement, think about boosting your pension savings so that you can benefit from tax relief and potentially enjoy a higher income when you stop work. If you are a basic rate taxpayer, you will receive tax relief of 20pc on your contributions, rising to 40pc or 45pc if you’re a higher or additional rate taxpayer.
4. See if you qualify for a higher annuity income
If you plan to use some or all your pension to buy an annuity when you retire, and you have a medical condition such as diabetes or high blood pressure, or if you are a smoker, check to see you’re eligible for an “enhanced” annuity, which will pay you a higher level of income.