Example

Male aged 65 attained, total fund including tax-free cash £400,000. Target income £20,000 gross. Fund and income progress with 5% growth per annum

Year	Phased fund at start of year	Amount cashed in to provide income	1. Tax free cash	2.Total gross income	Total "income" recieved (1+2)
1	£400,000	63,351	15,837	4,163	20,000
2	£351,000	49,900	12,400	7,600	20,000
3	£312,000	39,000	9,840	10,160	20,000
4	£283,000	30,500	7,640	12,360	20,000
5	£261,000	23,400	5,860	14,140	20,000
6	£246,000	17,800	4,450	15,550	20,000
7	£236,000	15,000	3,870	16,130	20,000
8	£229,000	13,000	3,250	16,750	20,000
9	£224,000	11,200	2,810	17,190	20,000
10	£220,000	10,200	2,560	17,440	20,000
At age 75	£217,000	+ value accumulated within drawdown plan

From the above example you can see that if you only need a relatively low level of income, and even with growth of only 5% per annum, you preserve some of the fund with which you started retirement. So if you died before age 75 a large sum is inherited by your heirs, free of inheritance tax, assuming an appropriate trust is attached to the pension plan.

If you survived until age 75 (four out of five 65 year olds will do) you could utilise one of the flexible annuities, Canada Life or Prudential, both of which allow you to retain a lot of flexibility beyond age 75.

But do remember you are taking very real investment risks with phased retirement to maintain investment choices and inheritability, and you also lose the benefit of mortality-cross subsidy on the fund that remains invested, and risk annuity rates falling as you get older.

The more income you take, the harder the remaining fund will have to work to maintain this level of income and your fund value.

I am pleased to say that since we have been with you it has given us both financial rewards and conf...
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