Pensions are confusing and it can be difficult to decide what is the best for you. If you are not sure what an annuity is versus drawdown, this video will help you understand the difference.
#annuity #drawdown #ukpension
0:00 what is an annuity?
1:05 the pros of drawdown
2:00 the cons of drawdown
2:44 the pros of annuities
4:00 the cons of annuities
4:33 factors to consider in making your decision
5:31 cash reserve with a drawdown…(read more)
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Thank you for a really interesting and understandable video! This video is 10 months old at the time I am writing this comment. Near the start you say that the annuity rate is about 3%. Does that get fixed at the point where you take an annuity or can it still vary?
Also, I'm still working but have a private / personal pension (UK) that is about to mature or whatever the phrase is. The pension company are asking me whether I want flexible access, to take money as one or more lump sums, buy an annuity or leave the money where it is for now. From what you said in the video, it sounds like if I take any money at all right now I will pay PAYE and NI on it as if it is a salary increase? I don't plan to retire for another 10 years, so it sounds like the best option is to leave the money where it is as I don't need it right now?
Any help appreciated!
I believe there are types of annuity that you can buy that gives your relatives some money when you die depending on your age when you die. No doubt you get a lower rate with these. I watched a youtube video with all these annuity options recently.
For what it is worth, I won’t be buying an annuity when I retire in a couple of years’ time because a) the rates are so low and b) the risk of expiring early and my family losing all that money is too great in my view. Modest though it is, I think it’s reasonable to think of the state pension rather like an annuity in that – hopefully – it will continue to be more or less guaranteed. So that will be my ‘backstop’ income source and it’ll be into the scary world of drawdown for the rest!
Thank you for your videos which I have just discovered.
I often hear people refer to having for example two to four years expected drawdown as income in a bank account and appreciate this is a good hedge against market volatility. BUT if this can only be achieved by saving the 25% tax free cash you effectively lose 20% tax on future withdrawals above tax code.
Could part of your pension not be held as cash for the same purpose? This would surely allow more tax effective drawdown ?
Always hold gold the old saying goes
Fundamental bit of information here. Link an investment ISA to you stocks/bond investments hence income is tax free. You really should have mentioned this.
Am thinking of going down the drawdown route, currently aged 63.
Have a healthy balance of cash savings set aside. But worried about how inflation is eroding its worth…although it is so necessary to keep a cash reserve.
Hi I would like more information on low risk investment funds such as bonds?
Good video, I would prefer drawdown using bucket strategy . Some people prefer mixture of both .