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|
*Assuming an average 4.9% yearly growth before charges.