These questions have taken on a great deal more importance since April 2015, when new rules came into force allowing people to cash in on their pension pots once they are over the age of 55.
One new study looks to shows how a typical “balanced” investment portfolio split between British shares and bonds would have fared over a theoretical retirement lasting up to 45 years. The study looked at hypothetical savers who retired in each year since 1900. The idea was to see how long a £100,000 pot would last, taking into account the pattern of historical returns, charges and the impact of regular withdrawals.
The recent changes in pensions have focused minds on so-called “sequencing risk”: the damage that can be wrought by taking too much income when portfolio values are low. They looked across the decades to try and assess the chances of running out of money in 20, 25, 30 years and so on drawing down £3000 in inflation linked-payments. There was a slim chance of running out of money within 20 years. But given that pension cash is now accessible from the age of 55, this only takes you up to 75, leaving a likely funding gap of 15‑20 years, given current life expectancy. Enable’s IFA’s can help you look at your savings for your retirement.
Issued by: Enable Independent Financial Life Planners • 25c North Street, Bishops Stortford, Herts CM23 2LD • Telephone: 01279 755950 - Fax: 01279 657339 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority. It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us. NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE
http://www.telegraph.co.uk/pensions-retirement/financial-planning/definitive-historic-analysis-long-will-100k-invest-last-draw/
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