Flexi access drawdown pensions offer many benefits but there are also some risks. Before you make any decisions on what to do with your pension pot, you should speak to an independent financial adviser who can talk you through the options.
With flexi access drawdown pensions, you invest your pension into funds that you can draw an income from throughout your retirement. Your pension is usually invested in stocks and shares so it could grow in value but there are also risks too. Your pension pot may not grow enough to support your lifestyle and you could leave yourself short in later life.
When you turn 55, you have the option to take a 25% tax-free cash lump sum from your pension pot before you reinvest. You do not have to take this and it may be more sensible to keep it invested so you can use it at a later stage.
The rest of your money provides an income for you to live on in retirement. You can choose how much you draw each year and increase or decrease this amount depending on your situation.
If you are still employed you may decide not to draw any extra income especially if it would push you into a higher tax band. You could choose to reduce your working hours and top up your income with your pension or you may decide to retire and live completely off your pension.
You can’t predict how long your retirement will be so you need to plan wisely. You need an income that covers the lifestyle you have but you don’t want to run out of money.
At Rockwood Financial Solutions, we are experts in financial planning. We take our time to understand your individual circumstances. What do you need now? What do you want in the future?
Once we understand your individual situation, we can make recommendations on the best options for you so you can make informed decisions to protect your financial future.
If you want professional, impartial advice then get in touch. Contact us today for more information about retirement planning and flexi access pensions. You can do so by calling us on 0330 332 2679 or by completing the form here.