In the back
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[ PLATFORMS & PENSIONS ]
you receive at retirement. If you
have put a lot in over the years, the
chances are you will have a decent
retirement. If you had better things
to spend your money on, or couldn’t
afford the contributions, then you
may end up with an amount that is
insufficient to live on. The average
pension pot in the UK is £140,000
at retirement, which would provide
an additional £700 per month and
would last until the age of 90*.
This £700 can be added to the state
pension, which is also around £700
a month, producing an income of
£1,400 a month, before tax.
On your head be it
I’ve seen worse outcomes for
retirees, but if you are used to the
average UK salary of £36,611, this
may come as a shock.
Three retirement “crocodile pits”
1 2 3
The run-up to retirement
(55+) – What are your
goals and have you saved
enough in a tax efficient
way to achieve them?
Could you do more to
alter an unsatisfactory
outcome?
At retirement – What is the
plan? Are you going to go for
flexible drawdown? Are you
in the right vehicle (a SIPP,
for example)? How are you
going to convert a portfolio
into a monthly income and
what should you invest in?
In retirement – Are my
plans (or those of my
adviser) working and are
they delivering the lifestyle
I dreamed about? What
happens if there’s a crash
or a drastic change in
circumstances?
IMPACT ON AVERAGE UK PENSION POT
OF WITHDRAWING £700 A MONTH
160k
140k
120k
Lower growth rate 2% Middle growth rate 5% Upper growth rate 2%
One of the biggest travesties of the financial services
industry is that although there is plenty of help to get
your money into investments, there is almost none
when you want it back
100k
£
80k
60k
Average UK pension of £140,000
40k
provides about £700 a month in
20k
drawdown until age 90
0
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Age
*Drawdown amount reflects keeping money invested and assuming 3 average growth rates. We selected 5% to
model this example. Platform charges are 0.37%, inflation is 2.5% and drawdown rises by 2% p.a.
More worrying is that this scenario
relies on you getting hold of your
pension pot when you stop working,
investing it in a portfolio of assets,
wrapping it in a SIPP with flexible
drawdown access, then managing these
investments and selling them down if
you want to take out some cash.
Professional help
Surely, this is beyond the abilities
of all but the most experienced DIY
investors?
One of the biggest travesties of the
financial services industry is that
although there is plenty of help to get
your money into investments, there is
almost none when you want it back.
Although I’m a staunch advocate
of managing your own money, when
it comes to retirement, it is difficult
not to conclude that a professional
financial adviser might be a good idea.
A good financial adviser will
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