Drawdown considerations
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 The table below shows how a £200,000 pension fund could last 28 years if £12,000 was withdrawn, or 15 years £18,000 a year is withdrawn.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 | £20,000 |
Annual growth rate | Number of years before pension runs out |
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1% | 26 | 19 | 15 | 12 | 11 |
4% | 53 | 18 | 19 | 15 | 12 |
7% | - | - | 35 | 21 | 16 |