If you’re over the age of 55, then you may have the option to drawdown up to 25% of your pension funds. You can choose to use this as regular income or invest it to increase your funds.
This allowance is tax free, and you’ll also have more options as to how you use the remaining 75% of your pension pot. Generally, this will stay invested until later, but different policies have different stipulations as to how much you can drawdown and what happens with the remainder.
Effectively, a drawdown allows you to dip into your pension pot and begin to free up cash. You can use this to simply fund your retirement, or seek to increase its value with investments. This adds flexibility into an otherwise rigid pension plan, and can be useful if used correctly. You should work with an independent financial advisor or a pension drawdown advice team to consider whether a drawdown is right for you and how you’ll manage that money in the future.
Pension drawdown advice with Prosperity Wealth is quick and easy. We’ll gather all of the relevant information from your pension provider and look to mitigate any fees or penalties. We’ll ask you for a few details to track down your pension funds, then we’ll deal with your pension provider directly on your behalf.
You’ll let us know what you want to transfer and which format you’d like to receive your funds in. You’re in control of the process during this time and we’ll give you regular updates to let you know how this is proceeding. We’d suggest that you take your regular pension income for the month before you start our drawdown advice, as you won’t be able to do so when the drawdown has begun.
There are risks associated with drawing down your pension – as with any investment or change to your pension. It’s essential to get tailored advice on your situation before you make any decisions about your pension fund.
Any major financial decisions regarding your pension should be considered seriously. It’s essential to work with a trusted advisor if you’re considering any changes to your pension, otherwise you run the risk of decreasing its value.
One of the main things to consider is how you’ll fare if your investments depreciate in value. It’s essential to think about how you’d survive in this case and set income aside to use should this happen. You’ve worked hard during your life to save for retirement, so using this money smartly should be on your radar.
You can keep your entire drawdown as cash, rather than investing, but this may depreciate over time with inflation. For this reason, many people decide to keep just enough to act as an emergency fund, while cleverly investing the rest. You don’t want your pension to depreciate over time, as this will affect the quality of those golden years.
Obtaining pension drawdown advice can help you to fully understand all risks and overheads involved within the process.
We work with your provider to mitigate any financial penalties from the drawdown process. Many providers don’t want to give up your money right away, so they’ll impose fees or make the process more complicated. We’re here to cut through these with simple and effective pension advice.
If you want to go on to invest the funds that you draw down, then we can help you during this process. Our investment team would be delighted to get to know your portfolio and financial goals to advise you on how to grow your wealth. We can suggest smart investments with excellent potential returns to get you on the right path.
We’ll also advise you on how to grow this money or simply make it last throughout your retirement. You don’t want to run out of money during this time, so we’ll help you to make the right financial decisions to avoid this. If you’d like to discuss estate planning and leaving this money to your loved ones, then we can also offer this service to you.
No matter which of our services you’d like to discuss, we start off the process with a free consultation. Get in touch to access a full spectrum of pension drawdown advice from our skilled team.
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