According to the Association of British insurers (ABI) 40% of pensioners are withdrawing their pensions at an annual rate of 8%. Unless they have another source of income, their pension pot will run out. 

Reasons for this high withdrawal rate are:

• that pensioners need more money to be able to survive in this economy.
• they want to maintain the same lifestyle they had before retirement.
• they are not realistic about the lifestyle they can afford to lead.
• they are not considering the consequences of how they will survive later in life.

Drawing 8% is just not sustainable. The recommended rate is 4% to maintain a steady income for life. 

Retirement is sorted into three categories of lifestyle: luxury, comfortable and basic. The comfortable and luxury lifestyle groups spend the most on holidays, travel and luxury cars whilst the basic retirement class spends the most on food and housing. – which?

The harsh reality is that pension pots just can’t keep up with current inflation and economic trends, and you will have to save even more to maintain an acceptable lifestyle in retirement.

You need to decide what kind of lifestyle you wish to pursue when you are retired and plan accordingly.

• Be realistic about your expectations at retirement.
• Chat to your adviser to set up a long-term plan of action to get you through retirement.
• Constantly monitor and review your pension pot so you will not get any nasty surprises and shocks at retirement.
• Consider starting a supplementary savings plan towards retirement, so you will have a backup in case of emergencies. You could also use it to pay for holidays and luxuries, so it won’t eat into your monthly pension.

Your deVere Acuma adviser will be able to help you get a retirement plan of action in place that will suit your retirement lifestyle and prevent any nasty surprises. [email protected]

Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere Acuma adviser for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.