Pensions…a momentous day @ Just Retiring

I wrote on this site recently about our pension quandary.

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Well, today is a momentous day in the Just Retiring household….I’ve sent off an income drawdown application pack to Hargreaves Lansdown, requesting payment of the maximum 25% tax-free lump sum from my pension pot, with the rest going into income drawdown.

Why go this route?

Well, I’ve stayed clear of annuities for the reasons I spelled out in the earlier article. And I like the flexibility of income drawdown, under current rules and the new ones proposed with effect from April 2015. Despite the remaining funds in drawdown staying fully invested so the return from that pot is not guaranteed, as it would be from the annuity route.

I’ll have to adjust my investment philosophy a little to rebalance my risk outlook, and also try not to get too emotionally involved with daily market fluctuations. Which is not easy when you’re worried that you’ll run out of money before you shuffle off your mortal coil…..

But the main short-term benefit is taking the 25% tax-free lump sum from my hard-earned pension pot. Come next May, who knows what a political football that could become…it’s potentially an easy target for certain political parties.

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Gill and I don’t know yet whether we’ll be working again after our current sabbaticals. We’ll see how long we can survive on the tax-free lump sum I’m about to get from my pension fund, and pray that UK politics and global economics don’t start nibbling – or worse, gobbling – away at the shiny new income drawdown pot.

Retirement is like a long vacation in Las Vegas. The goal is to enjoy it the fullest, but not so fully that you run out of money. Jonathan Clements

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