We frequently assist clients in this complex area of ‘Pension Freedoms’ legislation. The decision to access pension freedoms has many important factors, and here we cover the top five considerations. 

1. 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. 

2. Expenditure 

How much do you spend? Do you have a modest lifestyle or expensive tastes? How will your expenditure change when you stop working and have more time to yourself? Do you have any burning ambitions on your ‘bucket list’ or one-off events (such as a new car or a family wedding) that will require funding? 

3. 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/be prepared to use your house or other assets to fund this

4. Inflation  

• How much can you afford to give to the family without running out of money?
• How much do you need to save now to achieve the retirement lifestyle you want? 

See more on lifetime cashflow modelling here.