16:52 24 February 2013
If you are planning to retire shortly and have started your retirement planning, there are many factors to take into consideration. The sheer amount of information can, at times, be overwhelming. Drawdowns can be very complicated, so regardless of the amount of information on the internet, it is a good idea to contact an Independent Financial Advisor (IFA) to help decode all the different options available to you.
To help your retirement planning a little bit, here are a few points about drawdown that you may find useful:
1.There is currently no age limit to participate in income drawdown plans, and no minimum income. You can leave funds untouched, indefinitely. If your goal is to pass money to your heirs, this may be a good option for you.
2.You may be subject to a cap on income withdrawal. Your pension provider will calculate your maximum amount available with the Government Actuary’s Department (GAD) guidelines to ensure accuracy.
3.If you opt to take out the maximum amount of income allowed, expect to have this number reviewed at least every three years since numbers change based on age.
4.If you decide not to take any income, you are still able to have tax-free cash lump sums paid to you after the age of 75.
5.Flexible drawdowns (as opposed to income drawdowns) allow you to change the amount you withdraw at any time, but there are stipulations which must be met for this particular drawdown option.
More good news about drawdowns is that you are able to change your mind at any time and invest in an annuity. This freedom allows you to maximize the amount of money you’ll receive throughout your retirement. You may need to switch, at some point in the future, to an annuity so take that into consideration during your retirement planning sessions.
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