Retirement Choices: Why drawing down is going up
With 60 being the new 40, savers’ active years are far from over when they give up work – for some, life becomes even more frenetic. In recent years, retirees have increasingly turned to income drawdown to help fund the lifestyle they want.
So, in our latest thought piece, we sought to find out who opts for income drawdown, how much they choose to withdraw and how sustainable this is proving to be, post-retirement.
For those members regularly taking income, the average amount withdrawn each time has increased over the five-year period to just less than 1% of their pot’s overall value. These payments are taken frequently, on average every month.
While it may be expected that those with fuller pots would be more likely to draw an income, what’s encouraging is that pot sizes across the board are likely set to increase. The majority of our members (around 60%) currently have pot sizes of between £30,000 and £150,000, but over the past five years average drawdown pot has increased by £20,000, with this trend likely to stay as the transition from defined benefit (DB) retirement provision continues.
As the DC pensions market continues to develop and pots continue to grow, we expect income drawdown to become an ever more popular choice at retirement.