The last in our series of drawdown briefing notes tackles the most common and difficult question: "Just how much income can I withdraw from my pension drawdown?"
There is no simple answer as it depends on many variables. Understanding what these are and how they affect the sustainability of income withdrawals is essential.
It's important that drawdowns are kept under regular review. Income withdrawals may need to be adjusted. Using a financial adviser should bring a robust approach to this.
Key factors that influence the income amount
The underlying portfolio and investment performance of the flexible access drawdown (FAD) fund
How much money the individual needs from their FAD fund
How long the income is needed for
In our briefing note, we look consider each of these factors in turn to help determine what constitutes a ‘prudent’ or ‘reasonable’ income withdrawal rate.