Withdrawing from Investments – NAVIGATING THE MINEFIELD

When you’re accumulating assets during your working life there are a number of decisions that need to be made. How much to invest and how much to spend? What assets should you invest in (property, stock market, gold, bitcoin!)? If investing in the stock market, how much should go into ISAs and how much into pensions? How much risk should you take? What should you do when the inevitable stock market downturns arise?

Getting the right advice can definitely help with all of the above. It’s difficult to do all of these things on your own. However, when you get to the stage of life where you are spending assets rather than accumulating, the need for advice is even greater. There are definitely good and bad ways of drawing down on investments and there is a very real risk that ‘you don’t know what you don’t know’. The kind of questions we can answer are as follows:

n Which assets should you spend first and which should be left untouched for as long as possible? n How can you limit the amount of income tax that you pay? n Are there any capital gains tax issues to consider? n As some assets are exempt from inheritance tax (IHT), what are the IHT implications of the order of spending? n When you withdraw money from your pensions, what option should show you the likelihood of you running out of money

when adopting a given strategy. We’ll only recommend a strategy that has a high probability of success. There might be various trade-offs and options to discuss in order to arrive at a viable plan and we’ll guide you through. Spending too much too soon could mean that you have to make drastic and unwanted changes to your lifestyle at some point in the future. The other side of the coin though is that you might be overly cautious with your withdrawals and not live the life that you wanted to live. You might also be overly cautious with the amounts that you gift to your children and grandchildren. We’ve seen this scenario too many times and it is a real shame. Although this is pretty complex advice, we’ll make it simple for you.

Please do get in touch if you’d like to have a chat. you choose? Annuity or flexible drawdown? Should you take the tax free cash lump sum all in one go or gradually? What percentage of your investments and/or pensions should remain in the stock market when you’re starting to spend the money? Conventional wisdom says you should reduce risk in retirement. We would suggest that it shouldn’t always be the case. Conventional wisdom doesn’t know about your personal circumstances. We will. Should your withdrawal strategy be amended in a major stock market downturn? What’s the cost of your desired lifestyle (both in the early years and later years)? If you withdraw enough money from your investments and pensions to cover your desired lifestyle, how likely is it that you’re going to run out of money?

There are various rules of thumb, but one size doesn’t fit all. We’ll stress test your withdrawal strategy using data starting in the 1920s to

 

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If you are interested in finding out how Claritas can help you achieve your financial and lifestyle goals, please pick up the phone and give us a call on 0161 636 9200 or email

Tim Walsham

Tim Walsham
Director


tim@claritaswm.co.uk

Krish Rathod

Krish Rathod
Wealth Planner


krishnan@claritaswm.co.uk

Alison Brimage

Alison Brimage
Wealth Planning Manager


alison@claritaswm.co.uk

Anna Walsham

Anna Walsham
Director


anna@claritaswm.co.uk

Debbie Robbins

Debbie Robbins
Wealth Planning Assistant


debbie@claritaswm.co.uk

Alex Dickinson

Alex Dickinson
Wealth Planning Assistant


alex@claritaswm.co.uk

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