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Exercising Pension Freedoms - what do I need to consider? - news article image

Exercising Pension Freedoms - what do I need to consider?

1 Mar 2018

2 minute read

Q: I would like to access my pension fund using “Pension Freedoms” but I am concerned about the fund running out too quickly. What do I need to consider?

A: We frequently assist clients in this complex area which has many important factors, so here we look at some of the key matters to contemplate.

Life expectancy – how long has the money got to last? Think about your health and lifestyle and consider how long your family members typically survive, then add a safety margin. Is your spouse younger – will you need to leave money for them? Any assumption needs to be robust, because once the fund has gone there are no second chances!

Expenditure – how much do you spend? Do you have a modest lifestyle or do you have expensive tastes? How will your expenditure change when you stop working and have more time to yourself? Do you have any ambitions or one-off events (such as a new car, the wedding of a son/daughter etc.), that will require funding?

Stages of retirement – we typically categorise retirement into three broad stages, but of course everyone differs! As a rough guide these are grouped as; Active, when you want to and have the health and energy to do the things you dreamt of doing; Passive, when you’re happy to stay at home and look after any grandchildren; and Care – will you require personal care and how much might this cost, and would you need to use your house or other assets to fund this?

Inflation – how will inflation impact on all the above in the future?

Investment – the investment return on your pension fund will need to cover all of these things, therefore it is crucial to take the appropriate amount of risk to deliver the right level of return to achieve your objectives. Avoid any ‘get rich quick’ investments and ones that seem too good to be true; they probably are! The key thing to remember here is to diversify.

As you can see there are many variables to this question. We specialise in helping people through this potential minefield, using sophisticated cash-flow modelling software which presents all of these factors visually. This allows clients to make sense of all of this and leads them to make smarter retirement choices.

Exercising Pension Freedoms - what do I need to consider? - news article image

For a non-committal meeting to discuss your options, contact Tim Davison on 01865 292200 or


Tim Davison

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