Will Your Money Last As Long As You ?




By Paul Lewis in SAGA Magazine.


There are so many uncertainties surrounding pensions these days. Short of consulting a crystal ball, how can you make sure that your retirement funds won’t run out before you run out of steam?

Until recently, you either had a pension that was fixed for life and grew at least partly with inflation, or you used your own pension pot to buy an annuity – a pension for life – which also could increase each year with inflation. You can still buy an annuity when you cash in your pension, but few do as they seem very poor value – you would need around £250,000 to buy an index-linked pension equal to the new state pension of just over £8,500 a year. Nowadays, people either invest their pension or keep it in cash and take out money as and when they need it. At the start, you can take up to a quarter of your fund out as a tax-free lump sum. And many now choose to put the rest of it into what is called drawdown.


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