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  • A bit about Dave

    Dave is 65.

    He has a yearly income of around £14,000 from a defined benefit (DB) pension (promising a set level of pension based on salary and how long he built up benefits) and his State Pension.

    He also has a defined contribution (DC) pension pot, based on contributions and investments, of around £150,000.

  • Background

    Dave needs a minimum income of around £16,500 a year to cover his essential expenses, such as food, utilities and running his car.

  • Dave’s idea

    Dave wants to take a quarter of his DC pension pot as tax-free cash to pay off his mortgage and buy a new car. This will leave him with £112,500 in his pension pot.

  • Our advice

    Our financial planner advises Dave to use part of his remaining pension pot to buy an annuity to give him a guaranteed income. We shop around and find an annuity that will take his total yearly income up to the £16,500 he needs.

    Our planner suggests Dave should use the rest of his pension pot for flexible income by putting it into a drawdown pension and using it to top up his retirement income as and when he needs it. The money will be invested with the potential for growth.

  • Fees

    Dave pays a one-off fee for the financial advice we provided.

The result

Thanks to our help, Dave has the guaranteed income he needs to cover his essential basic costs, and can dip into his flexible income whenever he needs extra money – for example, for home improvements or holidays. Even if his flexible income runs out in the future, his guaranteed income will continue for the rest of his life.

This is a real-life example, but the name and details have been changed.

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