So you’ve retired. You’ve decided how you’re going to spend your pension: you’re going into Drawdown. This makes sense to you; you want the flexibility to vary your income, make ad hoc withdrawals, and most importantly you want your money to continue to grow over the next 20 to 30 years, too.
What do you need to think about next?
Well, you’re going to need a relationship with a financial adviser. But if you’ve already decided on drawdown, you’ve probably already got one. You will meet with your financial adviser regularly throughout retirement, to check the performance of your pension and the sustainability of your withdrawals. This ensures that if changes need to be made along the way, you’re on top of them.
So what happens if you’re no longer able to make financial decisions?
If you lose capacity through illness or injury, you will be unable to make financial decisions for yourself. You might have heard of a Lasting Power of Attorney before; it’s a legal document you can put in place to appoint someone else to make decisions on your behalf if needed.
A Power of Attorney for Property and Affairs relates specifically to your assets and finances. This means that someone can carry out certain tasks as if they were you.
It can be used for most financial decisions and actions, be it paying a bill or dealing with tax affairs, changing energy tariff or opening a savings account online. Importantly, it can also ensure that your pension drawdown arrangement is able to continue smoothly, as your attorney can take over the reins to ensure you still get the level of income you need, and your pension pot is dealt with according to your objectives. Without it, you are stuck in a position where you can’t make any changes because you no longer have the capacity to make financial decisions. Your only option would be to have someone appointed as your Deputy by the Court of Protection, which can be both time-consuming and expensive. Not ideal when your income needs are at stake!
Therefore if you’re thinking about Drawdown, you should be also thinking about a Lasting Power of Attorney. The two go hand-in-hand.
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Disclaimer: The above content does not constitute financial advice. Your circumstances may differ from those outlined and you should seek advice which is relevant to your own situation.