How sustainable income levels can protect portfolio strength
Taking a sustainable level of income is important in helping drawdown customers maintain a resilient portfolio during periods of investment volatility.
Customers in income drawdown should think about the impact of volatility on their pension. While someone building up a pension can mitigate the effect of market falls by continuing to make contributions to their pension, those in income drawdown are not only not making contributions, they are actively drawing down their fund so it has less chance to recover from the effects of volatility.
We’ve used the data from our Drawdown Governance Service to model potential outcomes of what would happen to someone’s income if the markets were to drop by 10%, defined by a fall in the FTSE All Share of more than 10%. The graph below shows five instances since 2008 when this has happened. Current uncertainty over issues such as Brexit looks likely to bring further volatility to the markets in the coming months.
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