1 July 2014

Rethinking Retirement Planning 2 - Protect your future income

With the new freedom to withdraw your pension money (from defined contribution / money purchase pensions anyway), it is worth having a plan and setting a limit on what you withdraw to avoid running out of money in early retirement.

The primary purpose of a pension is to provide a retirement income. Relying on the State Pension is unlikely to be much fun. So it is worth understanding the level of income you need in retirement, and then matching that to the amount of pension you need.

Unless you have a final salary pension from another employer or some other reliable source of income, you should ring-fence some (probably most) of your pension to provide that income.

Planning ahead is the key thing here. Look at the income you need, decide how you can get it, work out how much of your pension needs to be ring-fenced. If you don't do that, the only person to suffer will be you!

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