Why I don't want to go with drawdown

michaels

Repeating my earlier qusstion. Dont annuities typically also have an rpi cap?

westv

michaels wrote: »

Repeating my earlier qusstion. Dont annuities typically also have an rpi cap?

They do if that is what you select.

choi

michaels wrote: »

Repeating my earlier qusstion. Dont annuities typically also have an rpi cap?

According to my IFA No

choi

cfw1994 wrote: »

I will ask!

You are massively adverse to risk, and yet you are sitting on a pot that is losing you money (to inflation) every year.
You have just accepted the risk that your pot is reducing.
Are you Nostrodamus, predicting an imminent market crash?!

None of the people replying here have a crystal ball. NONE!
& neither does your IFA.
(nor do I)

It does sound like you have other funds at your disposal.

I’m more of a gambler: with that in mind, & with that sum, I would invest in the lowest cost drawdown with exposure to world equity funds (& yes, some bonds) and see what I could do.
The only cost you can guarantee are those fees!
& certainly I would avoid any annuity.

But that is just me.

You did come asking for views!

Have you spoken with Aviva?

My current active pension fund is managed by them. Super low costs (we have a company member site: typically just 0.25-0.35% per fund chosen), but they sure me that in drawdown the mechanic work the same. My broad spread of funds have “averaged” over 10% for the past 10 years. Yes, I’ve now switched a bit to lower risk bond & gilt options, so I expect that to drop a bit, but even so, the fact I have 1% less to make each year put some me in a strong position to grow the pot.

After all this: if you are (in my mind, crazy) risk adverse and want an annuity, get your IFA to find the best he or she can.

Then get ANOTHER IFA to do the same. Maybe the second could beat the first.

Finally, ask a third.....or research them yourself.

Remember in drawdown you can revisit things: If I was locking my funds away in an annuity that I cannot then adjust, I would want to get a minimum of 3 quotes.

Good luck with your decision!

I placed my pot in cash at age 65 as I intended to retire then and did not want any last minute calamities
I then carried on unexpectedly running my business for two extra years
This more than compensated for any small reduction in my pot over the two years

dunstonh

michaels wrote: »

Repeating my earlier qusstion. Dont annuities typically also have an rpi cap?

If you choose one that does, it will. if you choose one that doesnt it wont.

Also, negative RPI can also see some annuities go down whilst others have a zero floor.

bostonerimus

Set up a balanced income portfolio for cautious risk
Cost approx 0.6%
Yield circa 3.5 - 4.0%
Cost pa to run
Circa
Platform 0.25%
Running Fund 0.5%
Portfolio Costs 0.6%

So you'll be paying 1.35% and getting maybe 4% return.....that's expensive IMO. What will this income portfolio contain? some bonds and some dividend stocks?

JoeCrystal

choi wrote: »

Options

I could go with drawdown for 3 years then review
Or just go with RPI Joint 50% annuity and sleep easy

I would go for the annuity, so I won't have to worry about the investment risks, but that is just me. You will need to come to a decision, so you won't have to worry about it anymore. Ultimately, only you can make the decision.

choi

dunstonh wrote: »

If you choose one that does, it will. if you choose one that doesnt it wont.

Also, negative RPI can also see some annuities go down whilst others have a zero floor.

My quotes do not cap RPI

Plus there is a zero floor

choi

JoeCrystal wrote: »

I would go for the annuity, so I won't have to worry about the investment risks, but that is just me. You will need to come to a decision, so you won't have to worry about it anymore. Ultimately, only you can make the decision.

To be brutally honest it is doing my head in
I think I now have all the info to make a decision based on peace of my Nd
Even if it means a possible lower income from an annuity capped to RaPI with 50% Spouse added

The Drawn Down option is not assured and in the immortal words could go down as well as up
And may not keep up with RPI

choi

Just crunched some numbers on the Drawdown
Pot Starts at £250k
Let's say yield is 3% average over 10 years
IFA and other costs at 1.3 % pa

After ten years my pot has fallen to £219341.00
I have taken yield only at 3% = £70758.00 over ten years
The annual yield is falling each year
But of course 25% of the payment is tax free

If I compare with an annuity over ten years
I get £71664.00 in ten years
My payments are increasing each year with RPI
My wife is covered by 50% Spouse

On the drawdown option I could of course end it at any time and use the remaining pot to buy an annuity
Let's say after 5 years
I would then be 72 and could get a better deal
Hopefully

It's this kind of dilemma that is frazzling my brain