Getting the most out of your money as retirement nears is a topic that’s getting much more attention than it used to. This makes sense, as the recovery from the global recession isn’t nearly as strong as experts had hoped for or even predicted. A sluggish economy naturally makes people fear that they’re going to have to work longer and longer, putting off retirement until they feel they’re too sick to do anything else.
But what if you had more options than at first glance? An income drawdown plan could be a great option, and it’s not something that’s discussed as often.
If you plan on paying into your pension for a longer period of time for the tax relief benefits, then an income drawdown is perfect. Your money stays invested, and you take the pension from the income that the investment fund generates for you. Since investments go up and down as time passes, it’s not without risk. You could lose a lot more than what you put into it, which is a risk that you need to think carefully about.
Still, the growth potential is huge with an income drawdown plan. With everyone talking about rising costs, this is something that you need to think about.
There’s another question at stake here too: what happens after your death? What can you really count on other than having to leave your precious loved ones behind? With an income drawdown plan, there’s a chance that you can pass that money onto your loved ones after your death.
Don’t think that you’re giving up the annuity portion completely. If you decide that you want to get an annuity down the road, then you can buy that separately. Your income drawdown plan truly is that flexible.
Make sure that you sit down with a qualified advisor. They have plenty of time to leisurely go over your options. A no-rush environment is critical when you’re trying to figure out your future.
If you have an existing pension, you may be able to transfer it into an income drawdown plan. In addition, the regulations are always changing. Having an adviser that can help you keep up with the changes is very important.