Visit the online library to see all my guides
Annuity or Dradwown
When you reach the time when you need to start spending some of the money saved up in your pension plans you will have several different choices; do you take your pension as a cash sum, as regular guaranteed income or by taking income withdrawals?
The biggest advantage of the pension freedoms is that you have the flexibility to spend your pension pot in the way that suits your personal circumstances. However, one of the disadvantages is some of the traditional safeguards that made sure you spent your money wisely and never run of out of income have disappeared.
Before you decide how to take cash or income from your pension pot you need to think about some important questions:
WHEN IS THE BEST TIME TO TAKE CASH OR INCOME?
Although it might be tempting to dip into your pension pots as soon as you reach age 55 (currently the earliest you can take money out of your pension), it is normally better to wait until you stop working or you really need the money.
HOW MUCH INCOME SHOULD BE GUARANTEED AND HOW MUCH FLEXIBILITY IS NEEDED?
Most advisers recommend your base income should be guaranteed. You can then take a more flexible approach for the remaining income.
WHAT SHOULD HAPPEN AFTER YOUR DEATH?
You may want your spouse or partner to have a guaranteed income so they don’t have to make complicated financial decisions or you might prefer they get control over your pension fund. You have a lot of choices to consider.
HOW MUCH RISK SHOULD YOU TAKE WITH YOUR PENSION POT?
You may want to have flexibility with your pension income but can you accept the risks? You should consider investment risk and the risk of running out of income. On the one hand you may live much longer than expected but on the other hand your health may deteriorate and you may need expensive care.
If you want to make the most of pension freedoms you should start planning ahead and make sure your financial affairs are in good shape in the years running up to retirement.William Burrows
Offices in London and Northampton
Call: 07730 435 657
Better Retirement Group Ltd
|400 Pavilion Drive
| 68 Lombard St