For the successful entrepreneur, thinking of the future is second nature: you know exactly where you want your business to be in five, ten, maybe even fifteen years. The best way to see these aspirations realised is to plan ahead, and no savvy business owner would fail to have a strategy in place to see their dreams come to fruition.
The same rules should be applied to your retirement. Although those lazy days may seem a long way away, the wisest among us have spent a lot of time thinking about how we’d like to spend them. For most, living in penury is not one of the things they imagine, yet without planning ahead for your retirement, subsisting on a basic pension is a highly possible outcome.
One of the best ways to take control of your future and stop this from happening is by investing in a self-invested personal pension (SIPP). Increasingly popular over the course of the last two decades, these personal pension plans offer many benefits for those who wish to secure a golden future even when their working life is through.
Investors make choices about what assets are bought, leased or sold, and decide when those assets are acquired or disposed of, subject to the agreement of the SIPP trustees (usually the SIPP provider).
If you’re considering your pension options, here are just a few of the benefits that you might want to think about:
One of the greatest advantages of investing in a SIPP is the flexibility they provide. Nothing is set in stone, and this means that it’s down to you to decide what you want to invest in, how you want to use the money you save, and the investment package that you want access to. You control how you much money you want to set aside for your future. It’s all up to you.
This flexibility provides SIPPs investors with an unparalleled degree of control when it comes to building their future. It is your choice to decide how to invest your money, and this means that the amount you save is entirely in your hands. You can make changes when you current plan is not enough for you.
The greatest boon of a SIPP is the many tax benefits that are attached to them. These can prove extremely lucrative. The first of them is tax relief. For basic rate taxpayers, the government automatically adds 20 per cent to your fund every time you make a payment. Thus, if you invested £8,000, this would actually provide you with £10,000 when you retired.
For higher rate taxpayers, this relief is set at 40 per cent, whilst additional rate taxpayers receive 45 per cent on top of anything that they invest. Additionally, your funds will not be charged for capital gains or income tax, nor will your heirs be taxed if this sum is passed on to them.
If you’re considering your retirement options, could a SIPP be an ideal choice for you?