Have you planned for your retirement? If you have a pension, do you understand how much your monthly income will be? Pension rules have changed and you have more freedom now to decide how you want to manage your pension pot. You can take out a lump sum and leave the rest for income, but you’ll need to decide how much to draw down and how much income you think you’ll need to live on. To work out the figures, you’ll need to use a pension drawdown calculator.
When you’re deciding how much of your pension pot to draw down, you’ll need to understand how it’s going to affect your future income stream. If you draw down too much you could find yourself short of income in the future, but if you only draw down a minimal amount, you might not be making the best use of your capital to fulfil your present goals. The way to sort out this quandary is to use a pension drawdown calculator. This is a financial calculation tool that will allow you to work out how much you can draw as a lump sum and how much income you can take without draining your assets too quickly.
Most of the large pension providers, asset management firms and financial advisers include a range of calculators on their websites, including a pension drawdown calculator. You will need to know how much money you have in your existing pension fund and then you can use the calculator to postulate different lump sum drawdowns and how they would affect your ongoing income.
How to use your pension pot to your best advantage is a complex decision and for most people professional advice from an asset manager or financial advisor is critical. However, as you start to think about your future income, here are some points to bear in mind:
Using a pension drawdown calculator will help you with the figures, but taking professional advice from an expert is essential for such a far-reaching financial decision.