What happens to your long-term savings plan after you turn 65?
What do you need to know as you approach 65?
If you’ve been paying into a pension savings scheme and it’s due to end soon, the related tax relief will end too. That comes at a time when you usually have to continue paying taxes after taking retirement. However, you can still put money into a long-term savings plan after retiring and continue earning up to 30% tax relief.
If your long-term savings contract ends on or after your 65th birthday, you have until the day before you turn 65 to take out a new contract that runs for longer. In fact, you can easily continue saving for the long term during retirement and continue benefiting from tax relief for many years if you still pay taxes during that time.
Important to know: when you enter into your new contract, opt right away for the highest amount you can possibly pay in (that amount depends on your annual net taxable income). You can always reduce that amount in the years that follow, but you can’t increase it – that would be detrimental as you would end up with a higher final tax bill.
A second savings contract of this kind must run for at least 10 years, at which point you pay a lump-sum final tax. After that, you can carry on saving in the years to come while continuing to benefit from tax relief.
We’d be happy to look into whether a new tax-efficient savings contract would be your best option and to work out your ideal savings amount.
Don't have a long-term savings plan, but are interested in one?
You have until the day before you turn 65 to start long-term saving. The big advantage is that you may continue long-term saving even during retirement, whereas pension saving has an end date. It means you can also benefit from tax relief after retiring, because even then most people still have to pay taxes.
What’s the situation if you’ve already turned 65 or are older and you’re not engaged in long-term saving?
Unfortunately, the law does not allow you to enter into a new long-term savings contract after you turn 65. However, there are other ways to be canny with your money. If you have a decent amount of savings and you have the financial leeway, you could start investing. You can always start off by investing small sums of money without having to become a specialist to do so. Interested? Check out the three most popular solutions for new investors.
