There isn't a never ending porridge pot
Posted on Aug 05, 2019
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Many of our clients worry that they will miss the regular income offered by a job when they retire. It is possible, though, to take a flexible income, meaning you can take funds out as and when you need it. There is also potential to set up a regular income to ‘drawdown’ your money, which suits many people, who feel that they will miss their monthly salary.
Having said all this, while we talk to our clients about their hopes and dreams in retirement, until this time comes, it can be difficult to tell exactly how much money you’ll need each month to get by. Will lunches out and weekends away be the norm or will you find that you aren’t actually going out as much as you thought you would?
Thankfully the drawdown option does offer complete flexibility. The figure you decide to drawdown monthly can be scaled up or scaled down, as you settle into your own particular retirement routine. Drawdown of income can also be halted completely.
As pension planners Tunbridge Wells, we are on hand to support our clients through this process of helping them adapt to retirement. On the other hand, drawdown investors who have chosen not to get advice are by themselves.
According to figures from the Financial Conduct Authority, there was a 27% growth of drawdown sales in the second half of 2017/2018 to £11.1 billion, compared with the same period in 2016/2017. In the same half of 2017/2018, the size of the average contract-based pension pot entering into drawdown for the first time was £123,000.
According to research from Zurich (which carried out an online survey in April this year of 2028 adults aged over 55, who had accessed their defined contribution pensions since 1 April 2015), 52% did not know they could reduce their withdrawals and 56% were unaware they could stop withdrawing money altogether.
People in this situation, who aren’t being advised and continue to drawdown the same amount at a time when stock markets plunge, risk the value of their remaining funds reducing dramatically and their pension pot becoming depleted too soon.
As ever, the key is to get good independent financial advice. At The Goodman Partnership, we will work with you as you approach retirement to work out a way ahead which works for you. If you decide on drawdown, we will help you decide how much to take and, once you have embarked on retirement, explain to you how to scale up or down to fit your needs. Nobody’s finances are the same and everyone has different goals and aspirations.
At The Goodman Partnership – your local retirement planner in Tunbridge Wells - we understand that informed advice is key. We’ll help you to weigh up your options and make the best decisions for the future.
Give us a call on 01892 500600 or click here.