How to make your money last whatever size your pot

PAM, 64 Pam has a private pension valued at £150,000. She was contracted out of the state pension scheme and therefore will receive a reduced state pension of £128 a week at the age of 66.

She wants to give up work soon to enjoy retirement. She is divorced, owns her own house, and has two grown up children. Pam can choose to take her maximum tax-free cash of £37,500 so she can

enjoy the early years of her retirement, perhaps making some home improvements and enjoying a nice holiday or two. She can leave the balance of her pension invested, or draw an income. She

is keen to leave a legacy for her children if she can, so could decide to take income from what her investments yield. It will depend on their performance but could, after charges and costs,

provide an income of £4,500 a year. Given Pam owns her own home, at some point she could downsize or look at equity release to generate additional capital to help her children with their

house deposits.This could be more tax efficient than raiding her pension.  While the rules allow people to access their pensions from 55, this doesn’t mean you should, as it is most tax

efficient to leave the money in the pension where it will grow. It also means the amount Roger can withdraw tax-free on retirement should have grown. It may be sensible to access ISA savings

rst as this is tax ef cient and could help bridge the gap if Roger looks to slow down or treat himself and Janette to a big holiday or new car. Roger is risk averse so may consider an

annuity to provide a guaranteed lifetime income at some point. He should certainly focus on paying off the mortgage before he nishes work. SUE, 49 Sue is married to Dave, but nancially

independent. She has been saving since she rst started work and has three pensions with a total value of £65,000, and although not planning to stop work any time soon, wonders if she can

make her money work harder while she is still able to save. Sue has £2,800 outstanding on a credit card and has had periods off work to raise the family which means she won’t have the full

35 years of NI for the state pension. She needs to focus on paying off the expensive credit card debt first. She should consider a balance transfer to a credit card with 0 percent interest

and pay it off before the offer ends. It might be worth considering consolidating the pensions into one plan, as the charges may be lower and a more modern pension may offer more choice

about how to use the money at retirement. Sue should check there are no transfer charges or guaranteed annuity rates attached to the old pensions. Once the credit card is paid off it would

be well worth diverting the money used to pay off that debt to boost Sue’s pension savings. She should also consider boosting her state pension by paying voluntary National Insurance

contributions to make up any gaps in her record. Usually you can only go back six years, but there are exceptions.