“People born today can expect to live almost twice as long as their counterparts in Victorian times1. It follows therefore that we need a different approach towards our finances in old age. The introduction of pension freedoms at retirement mean that people can spend their pension pot however they want to, and as quickly as they want to – subject of course to the relevant tax charges. In the main this is a good thing, as it creates greater flexibility so people are able to tailor their finances to their individual needs and react to unexpected circumstances.
What these figures also show however, is that increasingly, the most likely financial future is a period of healthy and active retirement, followed by a prolonged period where health is compromised. It is essential therefore that people accessing their pension benefits consider carefully how long their pension might have to last and how their income patterns might change over time. Spending too much in the early years, however lovely that might be, could have unfortunate longer term consequences.
For most people the task of identifying the amount of money that can be realistically withdrawn while trying to avoid running out too soon is simply too difficult. Consulting a financial adviser is becoming essential, not for only the financial planning so people have choices in the their retirement but for also keeping on track.”
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