While income drawdown offers flexibility, it also comes with risks:
- Investment risk: The value of your pension pot can go down as well as up, depending on the performance of your investments.
- Longevity risk: There’s a risk of outliving your pension pot if withdrawals are too high or investment returns are lower than expected.
- Market fluctuations: Market volatility can impact the value of your investments, especially if withdrawals coincide with market downturns.
- Complexity: Managing an income drawdown strategy can be complex and may require ongoing monitoring and adjustments.