Platforms & Pensions
Longevity of pension pot ( Scenario 1 )
8 % 5 % 2 %
500k
400k
£
300k
Age
Returns are inflation-adjusted , based on a £ 500,000 pension pot , withdrawing £ 2,049 a month . Inflation at 2.5 %.
If my portfolio could deliver returns at 8 % every year with the same income I derived from the annuity (£ 2,049 a month ), then I would struggle to run out of money , or could opt to increase my income . The more likely scenario of a 5 % average annual return on my investments would conveniently get me just beyond my actuarial life expectancy , whereas I ’ d be out of money at the age of 84 if my money only grew at 2 % a year . Sorry kids . I was surprised how similar the income from an annuity was to what I would get if I remained in drawdown , as I have always maintained that you should be able to get a significant uplift by remaining invested , but clearly market conditions favour annuities at present .
Issue 89 - November 2022 / 71 /