Blended Drawdown and Annuities
Drawdown or Annuity or both?
How you fund your retirement is your choice and there’s more than one way you can take your pension. Did you know that you could combine your retirement income products so you can have both flexibility and security? You don’t need to feel restricted to just one product, it doesn’t have to be an either/or decision.
Your pension drawdown gives you the flexibility to enjoy your retirement your way, but your pot might not last for as long as it needs to. And whilst leaving it invested gives it more chance to grow, as with any investment, there's a chance it could go down in value too.
Whereas, having a guaranteed income for a fixed term means you always know what you have coming in to cover the essentials. Guaranteed income can come in different sizes, you could take a Lifetime Annuity which will guarantee you an income for life or a fixed term plan which can buy you a guaranteed income for between three and 25 years. With all guaranteed income options once started you can't cancel them.
Find out what an annuity income could look like?
Understanding how much income an annuity could bring may help you see if a blended retirement income could work for you. Our Retirement Income Calculator can help.
More and more people are using both a drawdown product and an annuity together.
For example, if you move your pension pot into drawdown and start by taking your 25% tax-free cash. You then have the flexibility to drawdown further lump sums as and when you need them.
You then decide that you want the security of a guaranteed income to pay your regular bills, so you use 60% of your remaining drawdown pot to buy a guaranteed lifetime annuity and leave the remaining 40% in your drawdown pot to use when you need it.
Need some help?
Making well-informed decisions about how to finance your retirement is important so it’s worth shopping around and using available guidance and advice, before you buy. Other providers may have more appropriate products or be able to offer a higher level of retirement income.
Retirement guidance
The government’s free and impartial service, offering guidance to make money and pension choices clearer.
To find out more or book an appointment online click below or call.
0800 138 3944
8am to 5pm, Monday to Friday.
Calls may be recorded and monitored.