Of course every client is different. But the amount of sustainable income they can take from their plan will generally depend on things such as their income needs, life expectancy and personal circumstances.
The heat map below shows sustainability scores based on how much income is taken from the plan and for how long. It assumes a client’s invested in Governed Retirement Income Portfolio (GRIP) 3 and a 1% annual management charge (AMC) applies.
|Income % (per year)|
All values calculated as at September 2021, using a 1% AMC and invested in GRIP 3
Key: 85%+ Highly sustainable 75 - 85% Reasonably sustainable 50 - 75% Moderately sustainable <50% Not sustainable
Our current view is that taking an income of 3.5% is highly sustainable. This is based on income being taken for 25 years and assumes that the client’s invested in GRIP3 and a 1% annual management charge (AMC) applies.
We update the assumptions used in our drawdown governance service every quarter to make sure your client's income sustainability score always reflects current market conditions.
As expected, uncertainty remains over the quarter. This quarter we see increased volatility across most asset classes along with lower future expected returns.
Our expert view is that the level of chosen income is unlikely to be sustainable and the client has a very low chance of being able to maintain it.
Our expert view is that the level of chosen income is moderately sustainable and the client has a moderate chance of being able to maintain it.
Our expert view is that the level of chosen income is reasonably sustainable and the client has a reasonable chance of being able to maintain it.
To find out more about income sustainability and how we can help you and your clients, speak to your usual Royal London contact.