Income in Retirement greater choice and flexibility but what questions should you be asking?

New pension freedom rules give you greater choice when it comes to retirement income, but you also now have more responsibility to make sure you don’t run out of money in your golden years.

Savers with defined contribution pensions no longer have to turn their pot into an annuity – as most previously did – and can instead stay invested and take an income through a drawdown scheme, or by withdrawing lump sums.

How much secure income do I need? 

Using drawdown or lump sums gives you greater flexibility with your pension pot than an annuity’s fixed income payments, but you need to plan what your expenditure will be so you don’t end up running out of money.

You need to consider your essential income needs, such as money for food and bills. You also need to allow for unexpected bills and emergencies with a rainy day fund.

You may also want to spend on luxuries, such as holidays or a new or classic car, or help your children or grandchildren climb the property ladder.

Do you have income or capital elsewhere?

Depending on when you retire you should also get a state pension, but it is worth considering other assets such as property or products such as Isa’s or savings which can provide extra income.

Relying on more than one source can mean taking out less of your pension and staying invested for longer – and could prove more tax efficient.

How much risk can I take?

Investing for income in retirement is a different ball game to putting money away when you are working and still in what experts call the accumulation phase.

For most people being invested in retirement means trying to generate an income, perfrom many sources.

Ideally, you need your income to beat or at least keep up with the cost of living and your assets to not be eroded too fast. Inflation becomes more of a danger for those in retirement where income doesn’t rise.

Are you likely to outlive your money? You need to ensure your investments can provide a lasting income.

If you need help or advice with your Retirement Planning including the new pension freedom changes please contact me,

Debbie Day. Mobile:07704311021

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