Longevity
Planning for a long life can only be based on probabilities and averages. Mortality tables can help to predict the average life span for both men and women.
Whilst planning generally goes beyond standard mortality rates, currently 78.6 for men and 82.6 women, therein lies the problem. If you plan too long you can leave too much on the table, plan too short and your investments run out. Cashflow modelling can be invaluable in helping to visualise the effects of longevity.
Investment influences
Investment influences encompass three impact factors that determine the return on your investments.
- Market returns: These, by their nature, are based on past years; however, tomorrow is a promise to no one. Can you model against what world leaders may say or do that may have unintended consequences when we consider world-wide trade policy, conflicts and tightening taxation? A lump sum taken in the middle of a market downturn could be catastrophic for your retirement needs, and derail hard-earned investments with little time or income to support a recovery.
- Inflation risk: The UK aspires to keep annual inflation to 2%, however, we have not achieved this figure since 2021, with the current costs of enjoying your retirement climbing ever higher.
- Taxation: We see taxation through the lens of both the freezing of personal allowances and higher taxation on investments.
Trying to manage growth, inflation and taxation that all impact spending enjoyment can be challenging. Active investment management responds to changing capital market expectations and can play a pivotal role in helping to limit or mitigate the effects of the above investment influences.
Spending needs
Cash flow modelling and annual reviews can model the spending you need over your retirement, but what is the reality?
Consider the ebb and flow of a tide - this can be how your spending needs can fluctuate. Having a reliable car that always runs is different to one that needs constant, costly repairs. Is this a scenario that can be accurately modelled?
Also, can creating a fixed model of regular withdrawals that should ensure that your retirement income lasts, match the multi-layered flexible approach of a more active retirement in the beginning, followed by a more relaxed retirement as you get older, followed by potential care needs in the future?
How can we help you?
Remember, decumulation is not the end and as the three unknowns highlight, expert guidance and support from experienced planners and investment managers will now be needed more than ever. Leveraging their collective expertise will ensure that your retirement is on your own terms.
The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.
Tax treatment varies according to individual circumstances and is subject to change.
Approver: Quilter Cheviot Limited: 21 October 2025
