At some point in our lives we’re going to want to stop work and take it easy. But how are we going to pay for this? It’s a wise decision to have some money when this moment arrives.
How to save for retirement
The usual way to save for retirement is to have a private or workplace pension. You might have a workplace pension from your job. These have the extra advantage that your employer pays in too.
Pensions are a tax efficient way of planning for your retirement. This means that you don’t pay income tax on money you put into a pension and you don’t pay tax on how much it grows.
Your money is invested, so it can potentially grow more than in a bank account. But there’s also more potential risk and you could get back less than you invested. Over time, the aim is that any potential growth counters the risks. This is why investing is a long-term plan. Even if retirement is still a long way off, it's a good idea to start saving now. It can really add up to something bigger over all that time.
How you take money out
If you’ve saved into a workplace or private pension, once you reach 55, you can start taking your money out. You have choices about how you can do this. You can:
- Leave it where it is and continue saving. You don’t have to take your pension as soon as you reach 55.
- Convert your pension into a regular income (annuity), so you can always be sure of what you’ll get.
- Take lump sums or income from your pension as and when you need it.
- Take your total pension pot as cash.
- Usually you can take 25% of your pension pot as a tax free lump sum.
What you can do today
Scottish Widows are our Pensions experts; they’re also part of the same group as us. You can access the information available to help you in making the best decisions for you.
- Retirement Planning page - access information to help plan your retirement.
- Handy Tool - if you’re approaching retirement, review your pension options and see how much you might get from them.
- Pensions Transfer - if you have more than one pension pot you could combine them into one plan to make them easier to manage.
Or if you’re looking to be a little more self-directed with your pension you could look at our Self Invested Personal Pension (SIPP), which is available through Bank of Scotland Share Dealing.
Other sources of information:
For free and impartial money advice, visit the Money Advice Service.
You might want to talk to a financial adviser. Find one near you.
The Government are offering free guidance on your options online, by phone or face to face from Pension Wise.
Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628.