Individuals in drawdown oblivious to flexible income
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Individuals in drawdown oblivious to flexible income
Pension provider Zurich* has found that the majority of retirees taking an income in drawdown are unaware that they can reduce or even stop their withdrawals, meaning that they risk taking unsustainable levels of income that may not see them through retirement.
Good advice pays
Despite flexible income being one of the perks of drawdown, meaning that retirees can tailor their withdrawals to their spending, a YouGov survey commissioned by the provider has revealed that 52% of over-55s in drawdown are completely unaware of this fact.
Unsurprisingly, awareness levels were shown to drastically increase among those who had sought professional advice. While 77% of those receiving ongoing financial advice were aware they could vary their drawdown income, a worryingly low 35% of those not seeing an adviser knew about this benefit.
Keeping your savings safe
Being in the dark about this key detail could be dangerous; if stock markets fall, unsuspecting investors are at risk of draining their pension pots. Not to be confused with ‘pound cost averaging’, this is called ‘pound-cost-ravaging’, and occurs when individuals find themselves having to sell more investments to maintain unsustainable levels of income. We can help you to understand how your drawdown savings work to ensure they last through your retirement.
*Zurich, June 2019
It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency.
Information is based on our understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.
Tax treatment is based on individual circumstances and may be subject to change in the future.
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