One thing that disturbs pensioners is how to spend their hard-earned pension fund. With improvements in the financial sector, many pensioners are finding it hard to decide how to spend their pension funds. In case you have Frozen pension, you will need to unlock it to get the money. Unfortunately, using the pension fund in the wrong way means a life of suffering after retirement if the pensioner had not made good investments during their active years.
Ways of spending your pension wisely
Purchase Annuities
With different withdrawal options available, 
it is now much easier for pensioners to determine the fate of their pension funds. For instance, beneficiaries may choose to purchase annuities, invest it in stock markets, or claim it as drawdown.
Unfortunately, this freedom of choice may also act as a double-edged sword as making the wrong investment choice may affect not only the pensioner’s later life but also his family in case they are still dependent on him/her.
Buy stocks or mutual funds
However, most pensioners prefer to request their pension fund as an annuity. As long as the cost of living does not significantly go up, pensioners can live comfortably on an annuity. Secondly, pensioners may opt to buy stocks or mutual funds if they were active in the financial markets before retirement.
Although no one can predict the outcome of economic activities, experience in the financial markets can help pensioners to invest wisely in the financial markets and draw a constant stream of income from the stock markets.
Deferring the pension
Another method of spending your pension wisely is by deferring the pension. In case the beneficiary is still active, he/she can opt to continue working and defer the pension while at the same time making additional deposits to the pension fund with tax relief options. This option allows the beneficiary to continue to work for the same company, organization, or work in their enterprises.
Another common way of spending pension money is by taking 25% of the total fund as a lump sum tax-exempt income and then having the rest of flexible drawdown income streams in future. This option, allows the beneficiary to buy certain stock or investment assets with the 25%.
In case, the calculation i
s right; the investments can contribute significantly to the beneficiary’s monthly income. Later on, the beneficiary can decide to have an annuity or take out small withdrawals with the remaining 75%.
Another way of receiving the pension is a lump-sum payment. Although this mode is not popular, it can be an effective tool for avoiding expensive small payday loans. However, caution needs to be taken as this option has several drawbacks including loss of the money, wrong investments, and overspending on luxury goods.