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21 Aug 2013

How To Bolster Your Retirement Income

Many people know that securing a decent income in retirement takes a long time. Some of those approaching retirement age feel anxious about not having saved enough. There are various ways of becoming a DIY investor, without having to devote a lot of time and effort to the task.

There are a number of available options that can bolster retirement income, the Daily Telegraph notes. An account can be started online, thus saving hours of form-filling. What investors need to decide on is their preferred saving option. One of the most common and effective ways to save is by making a self-managed pension plan. These are called SIPPs, or self-invested personal pensions.

One of the key advantages of SIPPs is that they allow investors to save larger amounts of money, or up to £50,000 per year at present, including all pension savings. However, this is going to drop to £40,000 next year, the Telegraph explained. It is worth knowing that the total lifetime limit that can be saved in a SIPP currently stands at £1.5 million, including investment growth.

In addition, SIPPs provide a more generous tax relief, especially for high-rate taxpayers. The difference for basic-rate taxpayers is somewhat smaller, experts say.

It is possible to save unlimited amounts in basic investment plans but these offer savers no tax reliefs, the news source informed. If savers are not sure about how to begin the process, they can start with a basic investment plan and later switch to a SIPP or an individual savings account (ISA).

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