If you need regular income throughout your retirement, pension drawdown could provide this by using your own pension pot. Is this the answer for your retirement needs?
Pension drawdown has become a popular way of funding retirement. Pension drawdown can provide a regular income by reinvesting your pension pot into funds that are specifically and strategically designed and managed for this purpose.
Pension drawdown occurs when a client continues to keep their pension fund invested whilst simultaneously withdrawing money from it, with the aim of providing a regular income derived from your own pension fund.
So, how does it work?
Once you reach retirement, you can leave your pension fully invested with your provider, but you also then have the option to take out what is referred to as a ‘drawdown’. You can choose to take up to a quarter of your pension pot tax-f ree, which can be taken as regular payments or as a lump sum. Any withdrawals taken after the tax-f ree portion has been exhausted will be taxed as income.
Your drawdown fund can be invested in funds that you will have approved and agreed to with your financial adviser. The money you invest may continue to grow, however be aware there is also the risk that your investments may underperform due to unexpected poor market conditions. If you take too much out of your pension at an early stage, your investments could suffer, and you may not be left with enough money to live on. It is important to be aware that there are also charges involved with withdrawing funds, which can prove to be expensive.
If you take too much out of your pension at an early stage, your investments could suffer, and you may not be left with enough money to live on. It is important to be aware that there are also charges involved with withdrawing funds, which can prove to be expensive.
Do you have any queries regarding your pension? Sirius Financial can help, contact us today here.
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