Puzzled About Retirement years: Look for Drawdown

There is a lot of information to sort through about annuities and drawdown when doing retirement planning for the future

11:33 25 February 2013

Drawdown is increasing in popularity due to some recent changes which don’t place age limits on using drawdown.  There are some advantages as well as disadvantages to using drawdown, so here are the highlights you should consider about drawdown when doing retirement planning.

 

•Drawdown offers the potential to make more income than annuities since it is dependent on investments. 

 

•Drawdown allows you to have greater control over the investments of your finances and therefore over your income as well. 

 

 •Fluctuations in the market can impact your drawdown and cause lower payments

•Funds can be completely depleted due to market fluctuations

 

•Funds can be left to heirs. 

 

There is a lot to sift through during retirement planning, and this doesn’t even scratch the surface of the drawdown information. Since there is so much involved with drawdowns, and because drawdown tends to be a much higher-risk than traditional annuities, it is recommended to contact an Independent Financial Advisor (IFA) to discuss all options so you’ll feel more comfortable choosing the best retirement plans foryou.

 

Drawdown isn’t recommended if you only have one source of income, or if your pension is smaller than £20,000 per year.

 

Drawdown allows those with an additional source of income the ability to manage their own investments in the hopes of receiving a larger monthly payout. It isn’t for everyone, but it is definitely something which is worth considering depending on your financial status.

 

Consulting with an IFA is a beneficial way to cut through the jargon and get right to the key points which will matter most to your decisions, they’ll help you find out what you are able to invest and what options are right for you. Annuities are another option to consider for low-risk preferences.