![]() ![]() ![]() You also have to consider your own longevity - or how long you plan on living for. Although you can always seek financial advice, of course. It requires a degree of engagement and financial knowledge to make the right decisions. If you’re not particularly financially savvy, drawdown could be a burden. As mentioned, the income you receive will be dependent on investment performance, so steer clear if you’re looking for something more stable. Similarly, drawdown does not offer a guaranteed income in the same way as an annuity. If you’re not happy with the uncertainty associated with investing during retirement, then drawdown may not be the right choice for you. Primarily, keeping your pension pot invested means there is continued exposure to risk. Is pension drawdown right for me?ĭrawdown is not suited for everyone, and there are some good reasons why. Once you’ve set up drawdown, you can still be on the hunt for better ways to manage your retirement money, including changing drawdown provider, changing how often and how large your withdrawals are and the strategy for the remaining pension portfolio. Your current scheme may be able to convert your existing plan on your behalf, offering you continuity if you’re happy with the service up to now.īut you could get a better deal elsewhere, including lower fees, a broader choice of investment options or better levels of support, so it’s always worth comparing what’s available.Ĭonsulting a financial adviser could be wise in this scenario - they’ll be able to assess the best way to manage your drawdown withdrawals given your current financial situation, your goals, as well as how you would like the remaining pot to be invested. When looking to set up drawdown, you have two main options - stick with your current pension provider or shop around. The remainder of your pension pot remains invested, meaning the value of it can go up as well as down. You can also set up regular withdrawals.Ĭash withdrawals made after the initial tax-free 25% lump sum are taxable as earnings in the tax year you take them. From then on, you can continue to make withdrawals using drawdown whenever you wish. On reaching retirement age, which is currently 55 but will be upped to 57 in 2028, you are entitled to take up to 25% of your pension pot as a tax-free lump sum. ![]()
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