How inflation can damage retirement savings
How inflation can damage retirement savings
Increased cost of living may cause those in retirement to withdraw more of their pension savings each year than originally planned. Savers who draw down a larger income from their pension run the risk of exhausting their pension fund, depending on their pension’s growth rate. The table below shows how a £200,000 pension fund could last 28 years if £12,000 a year is withdrawn, or 15 years £18,000 a year is withdrawn. (Figures assume 4% growth rate)
How long will a £200,000 pension fund last? |
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Annual income | £9,000 | £12,000 | £15,000 | £18,000 | £21,000 |
Annual growth rate | Number of years before pension runs out |
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1% | 26 | 19 | 15 | 12 | 11 |
4% | 53 | 28 | 19 | 15 | 12 |
7% | - | - | 35 | 21 | 16 |