Times Money MOT
Informed Choice chartered financial planner Nick Bamford was quoted in the Times today, offering advice to Trish Phillip, a lecturer at London Metropolitan University who was coming up to retirement with plans to retire to Devon and run her own pottery business.
As well as describing the sort of net pension that Trish might expect to get from her various pension arrangements (State, occupational and private pension plans), he suggested that she should compare her net income against her likely outgoings in retirement.
His action plan for Trish was as follows;
-Obtain an up to date pension forecast;
-Draw up a budget for outgoings in retirement; and
-Be aware of age- related income tax allowances.
The latter point is particularly important because Trish attains age 65 next year and will then be entitled to a personal age-related income tax allowance of £9,940.
If her earnings from her proposed pottery business together with her pension earnings results in total gross income of over £22,900 she will start to lose some of the extra allowance (£1 for every £2 above £22,900).
Like many people Trish is unsure whether her business idea is sustainable but hopes it will fulfil her creative potential.