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Pension Income or Longevity
How do you strike a balance between an acceptable level of retirement income and ensuring your funds and assets will continue to deliver throughout your retirement lifetime? It’s not always an easy decision to make, particularly when final salary schemes which guaranteed an income for life have largely been replaced by pensions based on contributions. So much so, that Nobel Prize-winning economist Bill Sharpe described the balancing act as the “nastiest, hardest problem in finance.”
Unpicking the conundrum is one reason why the Pensions Policy Institute (PPI) has recently undertaken a study into the way in which other countries approach the income v savings retirement question. Interestingly, one of the first challenges thrown up by the study is the initial reluctance by retirees to access their pension pots. That, the authors say is due to retirees having to overcome the savings mentality which they built up during their working careers.
Having said that, the PPI acknowledges that when taken alongside the regular income provided by the standard state pension, the flexibility of defined contribution pension pots can help to address changing needs and risk attitudes in retirement. If you are looking for advice on pensions, or if your situation has changed and you may therefore need to review your existing pensions or investments, contact Beckworth by using one of the links on our website.
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