Tips to protect your retirement cash savings

Kristian Harper
Posted by Kristian Harper
Posted on July 26, 2022 Leave a comment

Approaching retirement? How to ensure your cash savings are protected

If you’re nearing your sixties, your financial situation is probably much different than it was 20 or 30 years ago. Perhaps you’ve paid off your mortgage and any other debts. Maybe your children are no longer financially reliant on you. 

Whatever your circumstances, this is a time in your life when you hopefully have more financial freedom.

You may also have a significant amount of disposable income - income you need to safeguard for what will hopefully be a long and enjoyable retirement. 

Pension freedoms 

One reason you may be cash-rich is that you now have access to your pension, which brings benefits and challenges.

Before 2015, the only way to convert defined contribution pension savings into an income was to buy an annuity, a type of insurance product that pays out a regular, guaranteed amount of money in retirement.

However, thanks to pension freedom rules, this is no longer the case. Now savers aged 55 and over have far greater access to their pension savings. In fact, they’re able to withdraw their entire fund in one go if they wish. What’s more, 25% of the fund can be withdrawn tax-free, with the remaining 75% subject to income tax. 

This may sound appealing but remember, if you access your pension savings at 55, you still have the rest of your retirement to fund and you don’t want to run out of money over the next few decades.

Having said that, each year hundreds of thousands of people do take a cash lump sum from their pension when they reach 55. And they can do anything they want with it, from home renovations to holidays to buying a new car. 

Your investments 

Another reason you may be cash-rich at this stage is you could be receiving dividends from stock market investments. 

It’s often prudent to reinvest dividends thanks to the effect of compounding, which in basic terms is the interest you earn on interest. However, you may choose not to reinvest all your income back into the stock market because you want to have access to the cash in case of an emergency. Or perhaps you intend to spend some of it in the short term so you need it to be readily available. 

Protecting your money

Whatever your reason for having large amounts of cash savings, this isn’t the time to take your foot off the pedal when it comes to making sure your money is safe.

As you head towards retirement, it’s more important than ever to safeguard your funds so that you can live the life you want in your later years. 

High on your list of priorities should be making sure your money is spread out across multiple institutions so that should the worst happen and your bank, building society or credit union collapses, you’d be protected under the Financial Services Compensation Scheme (FSCS). 

FSCS protects up to £85,000 of savings per individual, per financial institution, as well as temporary high balances of up to £1m for six months. Spending some time ensuring you don’t have savings above this limit with one UK-regulated institution is vital.

You could outsource your cash management to a wealth manager or financial advisor. That. however, would come at a cost.

An alternative option is managing your savings yourself, using a cash management platform like Akoni. With Akoni’s platform, you’d have access to your own personalised dashboard where you’re able to view all your cash savings - wherever they’re held - in one place.

Importantly, you can seamlessly set up accounts with multiple providers so that you have maximum FSCS protection.

Setting up an Akoni account is quick and easy. No tedious paperwork or lengthy account opening forms. You’ll be able to safeguard your cash in just a few clicks.

Ready to take control of your savings? Sign up now 

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