Brits turning 50 warned not to make 'biggest pension mistake'

Anyone who turns 50 in the UK is entitled to a free Pension Wise appointment

Finance experts have given sage advice to people born in the 1970s. Brits, especially those clocking in at the big 5-0, should pay attention to some sage advice from finance experts who are busting a potentially costly pension myth.

Experts referred to as the "biggest mistake" when it comes to retirement savings. To ensure a cushier retirement life, those reaching this significant age milestone need to mark off three critical actions on their checklist.

Firstly, any UK resident hitting 50 individuals born in '74 right now gets a complimentary Pension Wise appointment.

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This scheme, backed by the government, is designed to offer a comprehensive rundown on retirement paths and help you make insightful decisions as your working days start to wind down.

Finance experts from The Sun have highlighted the key blunder that's often avoided with guidance from these vital Pension Wise meet-ups; rashly dipping into your pension pot too soon, reports the Express.

Yanking out those funds prematurely can jack up your tax dues, diminish potential earnings from investments, and might burden your descendants with an onerous inheritance tax bill certainly situations to discuss with a financial professional.

Here's an important heads-up: there's been a drop in those seeking financial advice before touching their pensions in the past five years. Dropping some knowledge on the topic, Stephen Lowe, the Group Communications Director at Just Group, imparted his wisdom to the news outlet, stating: "Retirement decisions are some of the trickiest financial decisions that people will ever face."

Financial experts are urging retirees who go for income drawdown to scrutinise the fees charged by their providers and to shop around, especially when considering annuities. They've warned that a bad annuity choice could "easily lose pension savers thousands of pounds".

Stephen pointed out: "The gap between the best and worst deals has been rising through this year. That is true for all ages we track but is currently particularly high at 20% for buyers aged 75. There are no second chances when you buy an annuity you must get it right first time."

Moreover, many individuals are unaware that state pension payments don't start automatically upon reaching retirement age, as some opt to defer their state pension for more substantial sums later or because they're still working beyond 66.

Sir Steve Webb, Partner at LCP, highlighted that although deferring one's state pension is a decision based on personal circumstances, goals, and needs, he generally advises those in employment to delay it mainly for tax purposes.

Adding your state pension to your existing income could indeed push some into higher tax brackets, which means they could end up with less than if they had postponed their state pension payouts.

An expert has issued advice cautioning certain people about delaying their state pension, specifically targeting two groups: those who "don't expect to live long" and individuals on benefits. He highlighted that the former group may not reap the increased pension benefits of deferring, whereas the latter might face reductions in their other benefit payments as a result of their choice.