What should you consider when making pension withdrawals?

Wednesday 13 January, 2016

The graph below illustrates the potential dangers of taking fixed withdrawals in retirement without reviewing it.  If a person starts with a portfolio of £100,000 and knows exactly what the average investment returns and standard deviation of those investments will be over the life of their plan, they are still at risk of the sequence of those returns. Although this is an extreme example it shows there is a wide range of potential outcomes.

Daniel Stansall, Independent Financial Adviser, Barnet, North London said:

‘Unfortunately there is no accurate way to predict whether a client has sufficient funds to meet their expenditure needs for the remainder of their life.  However, by using our cashflow modelling service a client will get a good indication of whether their pension will support them in retirement, and it will act as a very good starting point.  The importance is that clients commit to a full financial review every year so any potential underperformance can be addressed and we can take appropriate action.  We recommend our clients are also prepared as a pre-requisite of going into pension drawdown that they may need to curb their expenditure if investment returns are not favourable.’

Daniel Stansall is a qualified Financial Adviser in our Barnet team, North London office.  He has passed the RO8 Chartered Institute of Insurance pensions update exam.  If you need advice about pension drawdown please contact us on 01727 845500 or email us at enquiries@lonsdaleservices.co.uk.  For more information on our retirement services review our pension information.

 

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