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Should You Take Your Full Tax-Free Pension Lump Sum at Retirement?
Hoxton Videos • Should You Take Your Full Tax-Free Pension Lump Sum at Retirement?
Taking 25% of your pension as tax-free cash can seem like the obvious move when you retire. But taking the entire lump sum upfront could mean giving up valuable flexibility, and potentially tens of thousands of pounds of future tax-free cash.
In this video, Hoxton Wealth CEO Chris Ball explains how pension withdrawals can be structured differently when bridging the gap between early retirement and State Pension age, and why the decision of how and when you access your pension matters just as much as how much you can take.
What the video covers:
- What happens when you take your full 25% tax-free pension lump sum upfront
- How phased pension withdrawals can work as an alternative
- How your Personal Allowance can affect the tax you pay on pension withdrawals
- Why leaving tax-free cash inside your pension can preserve flexibility
- How pension growth could affect the tax-free cash available to you over time
- How to fund the years between retiring and receiving your State Pension
Using the example of David, a 62-year-old with a £250,000 pension and £30,000 in savings, Chris shows how a different approach to pension access can allow him to maintain the same £20,000 annual income while retaining more than £45,000 of tax-free cash within his pension.
The key isn't simply knowing how much you can withdraw tax-free. It's understanding how and when you access your pension, and how those decisions fit into your wider retirement plan.
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