Pension Drawdown - Annual or Monthly ?

segovia

Assume I have a pot of 400K and I have decided a safe withdrawal is 4% 

Would you take one £16,000.00 per year or 12 x £1,333.33? 

J  

Exodi

Depends if you need to spend £16,000 immediately or if your spending is spread across the year.

As long as you have a sensible cash buffer, it's better to leave the money employed for as long as possible.

dunstonh

Whatever suits your objectives.

And remember, that 4% is not a safe withdrawal rate.

Triumph13

You also don't have to exactly tie your withdrawals to your sales of investments.  I take one withdrawal a year, near the end of the tax year, but with stocks being so high lately I have been selling index funds early and holding the cash in the pension to lock in some profits.

LHW99

If you are taking it as UFPLS, some platforms won't set up monthly UFPLS's - you have to request each one separately. Taking out annually (or 6 monthly) and keeping in a cash saving / ISA account to transfer from monthly can be less hassle.

Albermarle

You will probably have less need to contact HMRC for a tax refund, if you take it monthly.

molerat

There is also how the taxman treats the withdrawal(s) and how you feel about reclaiming tax.  Generally, dependent on the tax code issued, the easiest way tax wise is do whatever you want as long as you make a withdrawal in M12.

SouthCoastBoy

when I come to drawdown, if I do, currently moving towards an annuity, I'm planning on taking the full amount the preceding March, for the following tax year. For the first year of retirement I will live of cash savings.

For example if I retire Jan 2026, live off savings until Mar 27, withdraw 12 mths spending Mar 27 live off that until Mar 28 etc.

Albermarle

SouthCoastBoy said:

when I come to drawdown, I'm planning on taking the full amount the preceding March, for the following tax year. For the first year of retirement I will live of cash savings.

For example if I retire Jan 2026, live off savings until Mar 27, withdraw 12 mths spending Mar 27 live off that until Mar 28 etc.

Just be aware that timing pension withdrawals accurately is not that easy . For an end of tax year withdrawal I would probably start the process in the last week of February. Remember the providers tend to be very busy at tax year end.

Retiring Jan 2026 - Can we hold you to that ??

FIREDreamer

Monthly makes the tax admin a lot less of a headache.

SouthCoastBoy

Based on the last two responses, maybe I will go mthly withdrawals which would be starting Apr 26 in my example above. Thks.