STEP 1
Be prepared to take advice. Read the relevant Financial Services Authority (FSA) publications, take a look at the Pensions Advisory Service website, and read up on any other unbiased guidance you can find.
If you are not sure how to evaluate the choices open to you, take advice from someone who does know.
Consider whether you might qualify for an impaired life annuity or an enhanced annuity. Increased rates might apply if you have a lifestyle or medical condition, or if you are a regular smoker.
If you are considering taking an alternative route other than an annuity, such as income drawdown, your need for advice is likely to be greater.
If your pension savings represent the lion’s share of your income in retirement, the choices you make will be critical. Once you make your decision, you may not be able to change your mind.
How is your pension fund invested? Many people’s funds have been badly effected in the recent stockmarket turmoil. Take advice; check that your pension pot can be used to the greatest effect, and don’t be caught out.
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STEP 2
Clarify in your own mind your needs for income in retirement.
Think about what you need to live on now, and what you might need to live on in the future, say in 5, 10, 15 or 20 years’ time.
Do you have any other sources of income? What part might they play in your retirement?
What about the needs of your partner and anyone else who is dependent on you? How might this effect your income requirements in retirement?
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