IN THE BACK
Scenario 2
Now for the second scenario . What would happen if I split my £ 500,000 pension into two pots , putting £ 100,000 into a fiveyear fixed-term annuity , while keeping £ 400,000 invested in markets ? The aim is to keep a £ 24,500 income going during a five-year period of poor market conditions , followed by a reliance on drawdown from my remaining £ 400,000 pot – or potentially the other way round , where I draw down first and keep a slug of money back for an annuity as I get older . Annuities offer even better value as you age and become aware of existing / oncoming health conditions . To buy an income of £ 24,500 a year for five years will cost £ 108,438 of my pension pot , which looks like good value . The remaining £ 400,000 of my pot remains invested and is not depleted at a time of market uncertainty , therefore avoiding potential sequencing risk .
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