How to manage drawdown funds during retirement If you prefer, you can use part of your pension savings to buy an annuity and leave the remainder in drawdown. If you make withdrawals too frequently, your retirement income could run out earlier than expected.Ĭonsider, too, that large withdrawals can push you into a higher tax band and, as soon as you withdraw more than your 25% tax-free lump sum, the Money Purchase Annual Allowance (MPAA) applies which limits the amount that be contributed to your pension to £4,000 per year.Īdditionally, there’s no guarantee that your investments will continue to grow which means you could get back less than you invest.īuying an annuity is still appropriate for many people in retirement as it allows you to use your pension savings to buy a guaranteed income that lasts the rest of your life. It’s important to understand that it’s your responsibility to ensure your retirement income lasts the duration of your retirement and to understand that the more you withdraw from your pension pot, the quicker it will be depleted. Drawdown gives you the option of being able to choose your own investments, use ready-made portfolios or let an adviser choose on your behalf.Ĭall our specialist advisers on 08 What are the downsides? Not only does it enable you to take money from your pension savings whenever you need it, there’s no limit on the number of withdrawals you can make, and you can take out different sums each year.Īt the same time, the remainder of your pension pot can stay invested which means if your investments perform well, your income could grow throughout retirement. One of the biggest advantages to drawdown is the flexibility it offers. on income over £150,000, you will pay tax at 45%.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |