The 4% is if you want, or need, your pension pot to be sustained ‘for the duration’, and though it doesn’t seem to be framed in a way to make that guidance more crucial for smaller pots. But what’s a smaller pot?There still seems to be an "insistence" on the part of some pension organisations that you should take just 4% of your pot per year.....but this totally misses the fact that many folks sadly wont make it beyond the 20th year of retirement or, their health/mobility suffers so they become far less active and need far less money in the later years. I'd rather have a little bit more money in the early years when i'm healthy enough to enjoy it.
soon to be 58, soon to be replaced at work by a low cost Romanian, considering options as to what to do come year end.
Thanks for posting that link , very simple and informative. But it’s depressed me , my pot is only just above average so I can see myself working up to retirement age .The 4% is if you want, or need, your pension pot to be sustained ‘for the duration’, and though it doesn’t seem to be framed in a way to make that guidance more crucial for smaller pots. But what’s a smaller pot?
Noting that the average pot for 55-64 yr olds in the UK is just over £107,000. Which might sound a lot….however…the 4% guideline would give an annual drawdown pension (before tax) from that of £4,280. If of state pension age and getting the full state pension about 20% of that pension pot drawdown goes on tax…leaving £3,425…£285/month - or about £70/week. Add the £203/week full state pension of about £275/week - not exactly the riches of Croesus.
With that level of monthly income there could be significant pressure to drawdown quite a lot more than 4%. You can go ahead and do that but the smaller pot is getting depleted very quickly and investment growth could very easily not cover the drawdown…indeed might fall well short of covering it…and the pot ever decreases and ever more quickly decreases if the drawdown amount is fixed against a reducing pot.
With larger pots the scope for drawdown of >4% is there as the pot remains large enough to sustain future drawdown albeit perhaps at a reduced level being required, but that being consistent as your needs might lessen.
This below looks a useful site for pension and retirement facts and figures…but we have a Financial Advisor for advice on what is sensible and appropriate for our specific needs and aspirations.
What's the average pension pot? (UK by age) - Nuts About Money
Not sure you are saving enough into your pension? Here’s the average pension pot and how much you really need to retire.www.nutsaboutmoney.com
...and it's an issue that has been known about for many years...so what's been done or is being done about it...? Not a lot. The requirement on employers to set up workplace pensions for their employees will go a small way towards giving those reaching state pension a little more money, but in the context of rental costs it's not help much at all - and what we will have is the public purse funding rental property owners purchase of property through housing benefit.The BIG problem is folk retiring with way below average pension pots, who are paying rent.
This is going to be a massive issue in the very near future
I'm not sure of the logistics, but if you're poor enough to qualify for pension credit, you probably get housing benefit.
To those that have shall be given... Mathew something-or-other iirc.
I think you will find that is the working population who has to support those not working.
Housing benefit goes to the owner of the property not the poor people living in that property.
I think if you have a pension that pays x you are taxed on it as income ?
Perhaps it would be fairer if the tax rate for pensioners with incomes beyond £35k are doubled .. sounds mean but most won’t have mortgages and can holiday anytime of the year so don’t have enforced costs
Given that the older you are, the more likely you are to vote, the party who introduced something like that would be annihilated at the next election.
