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Mixed options case study

How we helped Dave maximise his potential by mixing his retirement options.

A bit about Dave

Dave is 65. He has a yearly income of around £14,000 from a defined benefit (DB) pension (promising a set level of pension based on salary and how long he built up benefits) and his State Pension. He also has a defined contribution (DC) pension pot, based on contributions and investments, of around £150,000.

Reading time

5 mins

What you need
An understanding about Pension Freedoms

Key themes at a glance

Tax-free
Take tax-free cash, opt for flexible income initially, then purchase an annuity later in life
Part annuity
Purchase an annuity with a portion of your pension pot and choose flexible income for the remainder
On-demand
Withdraw some cash, leave the rest untouched for a period
Flexibility over time
Flexibility to adjust income based on changing needs over time
Growth with protection
Potential for a balanced retirement income combining investment growth with protection
Tax focused
Considerations such as income tax implications, pension tax allowances, and inheritance tax

Background

Dave is 65. He has a yearly income of around £14,000 from a defined benefit (DB) pension (promising a set level of pension based on salary and how long he built up benefits) and his State Pension. He also has a defined contribution (DC) pension pot, based on contributions and investments, of around £150,000.

Dave's Idea: Dave wants to take a quarter of his DC pension pot as tax-free cash to pay off his mortgage and buy a new car. This will leave him with £112,500 in his pension pot.

Our advice: Our financial planner advises Dave to use part of his remaining pension pot to buy an annuity to give him a guaranteed income. We shop around and find an annuity that will take his total yearly income up to the £16,500 he needs.

Our planner suggests Dave should use the rest of his pension pot for flexible income by putting it into a drawdown pension and using it to top up his retirement income as and when he needs it. The money will be invested with the potential for growth.

 

 

 

 



The result: Thanks to our help, Dave has the guaranteed income he needs to cover his essential basic costs, and can dip into his flexible income whenever he needs extra money – for example, for home improvements or holidays. Even if his flexible income runs out in the future, his guaranteed income will continue for the rest of his life.

Fees: Dave pays a one-off fee for the financial advice we provided.

What should I do next?

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