Almost all retirement contracts allow you to have a tax free cash drawdown from the retirement fund
. One of the misapprehensions is that you can only get this lump sum when you stop working and take your retirement income too.
One thing that you should keep in mind is that taking funds out of your retirement fund is an important decision. You should only make it if you will achieve a long-term financial aim.
You may have to move your retirement fund to a new source to allow you to have a tax free cash drawdown. You must also decide how to handle the rest of your retirement fund.
Many people are aware that a lump sum can help them by having a significant change to their personal status. They are aware that they can have a tax free cash drawdown from their retirement funds. The lump sum is 25% of the total fund rate. However, there are some who oppose to have this lump sum because they believe that they have to take monthly retirement income. Some deals do insist that you need to get an income for you to have a tax free cash drawdown, but there are other options which you can choose from.
How it works
To get this, you have to transfer your present retirement plan into a proper income drawdown type deal then choose zero income option.
Opportunities
You have the opportunity to handle your asset options until you have decided to buy an annuity. A good investment approach could grow your funds. In case you die while the contract is in place, the income will form as a part of your assets and will be passed to your family.
Risks
You should get your lump sum before retirement because it might have a major change to your financial status. Also, your retirement fund could go down and up.
Getting the tax free cash drawdown early can cause a less retirement fund for your annuity purchase. Hence, you should seek an advice before having a drawdown.