Flexible Income Drawdown
Welcome to the Income Drawdown Section!
When approaching retirement and thinking about income drawdown it is important to look at all the factors. Look into death benefits, flexible drawdown, new rules, comparisons with annuities, tax free cash, the best providers, and IHT.
If you take an annuity young (especially early retirement) income may be much lower than if you went into Drawdown and took the annuity older. There are also inheritance tax benefits to drawdown. As with all investment decisions you must balance risk and reward . Income from drawdown is at the mercy of fund performance. ID is normally only appropriate if you have £100K+ in your pension pot.
With income drawdown or an ASP, you are not making one choice and sticking by it. With an annuity, you must accept the income you receive without reservation because you are not allowed change it. With drawdown, you get to control your level of income as long as it stays below the maximum limit allowed. Therefore, you can alter your pension fund to suit your needs whether you are looking to pay off bills or go on a holiday.
If you die before the age of 75, you will have better death benefits under income drawdown. One example of this is if you elect to purchase a spouse’s pension under the terms of your annuity. You will not need it if your spouse dies before you or if you were to get divorced. Income drawdown allows you to plan for such unpredictable circumstances. It is possible for you to purchase an annuity later on if you are in drawdown but you cannot get out of an annuity.