No Lambo: sensible savers no cause for drawdown worry

The majority of people are not entirely reliant on their personal pensions to provide an income in retirement, further suggesting current withdrawal levels are not a major worry.

Pension freedoms investors appear to be responding sensibly to difficult market conditions and Brexit uncertainty. The fact many people are adjusting their investment expectations and cutting withdrawals in response to negative returns is an encouraging sign.

With the FTSE 100 expected to provide dividend returns of 4.9% in 2019, investors may be able to apply a ‘natural yield’ strategy and maintain their lifestyle in retirement without eroding their capital.

This will, of course, rely on retirees taking sufficient risk and the underlying companies delivering the anticipated shareholder payouts.

The majority of people are not entirely reliant on their personal pensions to provide an income in retirement, further suggesting current withdrawal levels are not a major worry. 

In fact, less than 30% are relying on their personal pensions for more than 40% of their annual income, while 40% of respondents say these withdrawals represent less than 10% of their income.

Tom Selby is senior analyst at AJ Bell

Pension freedoms investors appear to be responding sensibly to difficult market conditions and Brexit uncertainty. The fact many people are adjusting their investment expectations and cutting withdrawals in response to negative returns is an encouraging sign.

With the FTSE 100 expected to provide dividend returns of 4.9% in 2019, investors may be able to apply a ‘natural yield’ strategy and maintain their lifestyle in retirement without eroding their capital.

This will, of course, rely on retirees taking sufficient risk and the underlying companies delivering the anticipated shareholder payouts.

The majority of people are not entirely reliant on their personal pensions to provide an income in retirement, further suggesting current withdrawal levels are not a major worry. 

In fact, less than 30% are relying on their personal pensions for more than 40% of their annual income, while 40% of respondents say these withdrawals represent less than 10% of their income.

Tom Selby is senior analyst at AJ Bell

Source: AJ Bell

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