![stock drawdown stock drawdown](https://static.seekingalpha.com/uploads/2009/10/1/saupload_hai_nymexproductcracks.png)
#STOCK DRAWDOWN HOW TO#
What can you do? How to ride out a falling stock market This might leave you in the absurd position of feeling you can’t use your pension pot to fund your retirement – at least not yet. But neither do you want to draw an income and deplete it further until it starts to recover again. You don’t want to move your money out of the drawdown fund, because this would ‘crystallise’ the losses (make them permanent). If you're in this position, you face a dilemma. This unpredictable volatility is the single biggest hazard of drawdown schemes. the result is a real rollercoaster ride for pensioners, who yet again have to see their fund shrinking by thousands of pounds more than they bargained for. The FTSE All-Share index has lost a lot of ground over recent months, so anyone drawing money out of their pension is depleting the fund at a faster rate than is desirable. Now in 2020 in the grip of the coronavirus scare, the same sort of thing is happening again. Even worse, taking money out when the market is falling only makes the problem worse, and in less than a year many would have seen the loss of nearly a tenth of their pension pots. According to Retirement Advantage, the average drawdown fund lost 8 per cent in the six months following April 2015, based on equity, bond and cash returns. When pension freedom was introduced in 2015, more than 43,000* people took out drawdown schemes – but poor market performance gave them a baptism of fire. However, this means it remains affected by stock market movements.
![stock drawdown stock drawdown](http://thisweekonwallstreet.com/wp-content/uploads/2021/03/Drawdown.png)
How the stock market impacts your drawdown schemeĭrawdown means your pension pot is left invested in the stock market, for you to draw income from it as required. The first type is known as an annuity, and the second type is drawdown. The two main alternatives are either a guaranteed income for life (which can't run out, but might not be very much) or a flexible income (which you can increase as need, but which can run out). When you retire, you have a choice about how you take your pension. Find out how the market might affect your retirement income - and what you can do about it. This can be a real problem if your pension is in a drawdown scheme. Poor stock market performance has hit investments hard over recent weeks.