AJ Bell: pension withdrawal stats prove need for advice

An AJ Bell survey of 250 UK adults aged over 55 who have flexibly accessed their pension shows 44% are withdrawing more than 10% of their pension savings each year.

With the festive season done and dusted, millions of Britons are preparing to work off their excesses after weeks of gorging themselves on turkey and stuffing.

However, savers stuffing their faces on pension freedom withdrawals might find it more difficult to get themselves back in financial shape.

An AJ Bell survey of 250 UK adults aged over 55 who have flexibly accessed their pension shows 44% are withdrawing more than 10% of their pension savings each year.

Based on the average level of pension savings of £118,000 those levels of withdrawals would only last for a maximum of 12 years. If that withdrawal is reduced to 6% of the starting fund value the money could last for a much more comforting 26 years.

These figures assume the fund grows by exactly 4% a year post charges. Chuck in some particularly bad returns in the early years of drawdown and the sustainability of those withdrawals will look even worse.

This highlights the value of regulated financial advice. Anyone taking advantage of the pension freedoms needs to have a realistic idea of how long their pension income might need to last and what level of investment return they can hope to achieve.

They can then work out how much they can withdraw each year without running out of money too early.

With the festive season done and dusted, millions of Britons are preparing to work off their excesses after weeks of gorging themselves on turkey and stuffing.

However, savers stuffing their faces on pension freedom withdrawals might find it more difficult to get themselves back in financial shape.

An AJ Bell survey of 250 UK adults aged over 55 who have flexibly accessed their pension shows 44% are withdrawing more than 10% of their pension savings each year.

Based on the average level of pension savings of £118,000 those levels of withdrawals would only last for a maximum of 12 years. If that withdrawal is reduced to 6% of the starting fund value the money could last for a much more comforting 26 years.

These figures assume the fund grows by exactly 4% a year post charges. Chuck in some particularly bad returns in the early years of drawdown and the sustainability of those withdrawals will look even worse.

This highlights the value of regulated financial advice. Anyone taking advantage of the pension freedoms needs to have a realistic idea of how long their pension income might need to last and what level of investment return they can hope to achieve.

They can then work out how much they can withdraw each year without running out of money too early.

AJ Bell survey of 250 UK over-55s.

AJ Bell survey of 250 UK over-55s.

*Assuming annual returns of 4% after charges.

AJ Bell survey of 250 UK over-55s.

*Assuming annual returns of 4% after charges.

AJ Bell survey of 250 UK over-55s.

AJ Bell survey of 250 UK over-55s.

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