How to fund your early retirement

Stuart Walker

Stuart Walker

Chartered Financial Planner

17 August 2021

This article first appeared in The Scotsman on 17 August 2021.

The days of a standardised pension date and a golden handshake after 50 years in the one firm are long gone.

Many of us change jobs and careers regularly, may have opted out of certain pension funds and voluntarily topped up others, had varying levels of contributions from a number of employers and even had our state pension date delayed. This can all make calculating what you will need to retire better a confusing business, and choosing when and how to access your money is vital.

A free webinar from Johnston Carmichael Wealth, a chartered financial planning firm with offices across the country, will take place on September 1, hosted by The Scotsman. The webinar is entitled Retire Better: How Do I Do It? and will help unravel some of the complications.

One of the key topics for discussion will be Flexi-Access Drawdown, a system that allows people to get access to their pension pot from the age of 55, if they choose to retire early.

How does it work?

To be eligible you need to be over 55 and have a defined contributions pension pot. The system allows you to get up to 25 per cent of your pension package as a tax free lump sum, with the rest staying invested. This portion can produce an income for you, or remain invested until the time when you need that income. You can choose how much you take out and when. This phased approach allows you to tailor your income to your own personal circumstances, making it a popular choice.

Are there any risks in flexi-draw down?

Yes. You will need solid financial advice to choose the best method for your planned lifestyle and the size of your pension pot. Put simply, it’s not a guaranteed income for life, and if you use too much of the pot too early, it may run out. Investments themselves can go up or down, so there is no guarantee on what return you will see on your invested portion.

Depending on the size of the pension pot, the amount you have as a lump sum or an income may affect your eligibility for state benefits.

Is it for me?

If you are eligible, then it can be a good fit. Many people enjoy the tax-free lump sum up front, allowing them to clear their mortgage, for example. For people who have been forced into early retirement due to ill health, access to a flexi-draw pension can help replace their salary.

Planning ahead

You can pre-plan for your retirement by investing in a type of personal pension known as a pensions wrapper, allowing you to save money and build up your retirement pot the way you want it. Self-invested personal pensions are tailored to your budget and the element of risk you are comfortable with, as speculating in investments doesn’t always pay off. A SIPP puts the saver in total control of where their money goes.

A Centralised Retirement Proposition (CRP) is another emerging choice, allowing cautious investors to not only plan for their golden years but to properly drill down into the “what ifs”, and have a balanced portfolio prepared for any rough patch life may throw at them.

Where can I find out more?

The free 90-minute webinar on September 1 includes presentations from Johnson Carmichael’s Stuart Walker, Head of Planning; Ross Leckridge, Chartered Financial Planner; Rory Brand, Financial Planner; and Kirsti Macdonald, Technical Specialist.    

It’s free to join, but delegates need to sign up in advance. Places are open now, so click here to book.


Johnston Carmichael Wealth are authorised and regulated by the Financial Conduct Authority.

Copyright of The Scotsman Publications Ltd.

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