After saving for many years during your working life, whether it be a defined benefit pension scheme or perhaps a personal pension or even a combination of both, deciding what to do with your retirement income is not always given the thought it deserves.
As with any point in a person’s adult life, drawing up a budget for retirement is essential, and it is prudent to keep this budget under regular review. Most people at the age of retirement have paid off their mortgages most of the larger loans that members of society take on whilst working full time. The spending patterns of mature adults tend to be different than those of the younger generation.
Budget preparation is useful to predict changes and provide estimates of your income and spending, ultimately providing a person with greater control over their situation. Forecast budgets can quickly show gaps that will enable alterations to be made ahead of potential problems.
Can I earn income during retirement?
Just because a person has retired from their main occupation and maybe collecting a pension does not mean that they are not entitled to fill a position of employment elsewhere. The main point to consider is that every person will subject to tax legislation and the associated allowances thereof. A person can take their monthly pension and earn income from a job, they will of course pay tax on money earned over the personal allowance, that being said, it is permissible to pay some of this income into another pension scheme (which is of course tax free). Doing this allows this money to grow over time and can be claimed as an additional income when required later on.
The state pension can be deferred by an individual, the longer that a person declines to take it, the more the fund grows and the higher the monthly income available from it will be.