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John’s Case Study – Flexi-Access Drawdown

John is 56 and has several pension funds and a good amount of savings. With this fund of £100,000, John opts to first take his full allowance of tax free cash, £25,000, as he wants to pay off his mortgage. He doesn’t require an income today as he is still working and given that he is comfortable with risk and can tolerate a potential loss, he puts the remainder into a Flexi-Access Drawdown and invests into funds with a medium risk profile.

He plans to reduce his working hours in the future and wants the flexibility to alter his pension income to ‘bridge’ this gap with a view to taking a safe, secure income when he retires completely. Let’s take a look at John’s Journey through Flexi-Access Drawdown, starting with £100,000:

Age Projected Amount in Drawdown John chooses to… Risk Profile How much is in Drawdown?
56 £100,000 Take £25,000 Tax-Free Cash Medium £75,000
61 £91,900* Take £5000 Lump Sum Medium £86,100
63 £97,600 Take a regular income of £2620 for three years. Medium £99,640
66 Retire completely and revisit his options with his £99,640

The ongoing costs for John’s Flexi-Access Drawdown would be:

Ongoing advice and review Platform fee Fund charges
0.5% 0.3% 0.7%

*Assuming an average 4.9% yearly growth before charges.

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