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Reviewing your retirement income and plans following a fall

Here financial expert Matthew Bromley looks at the use of cash flow modelling and why now is a good time to review your strategy, to help you ensure you can keep to your long term plans.

The use of cash flow modelling tools have become a very useful exercise in enabling individuals to develop their financial plans, giving them a clear insight into exactly what their income, expenditure and capital positions will be throughout retirement.

A model will show exactly what an individual’s income will be, each and every year, drawing from the various sources of income or capital that they have showing them whether or not this income will meet their expenditure requirements. It allows an individual to see whether they can put a tick in the box to say that they will always have enough income to meet their needs throughout retirement i.e. that their required level of income is sustainable.

When putting such a model together, assumptions are made for factors such as; inflation, deposit rates, property value growth and investment returns. It is good practice, as part of this exercise, to simulate the impact of a market correction to determine its effect on the capital position and, in turn, on the sustainability of income. For example, if the model assumes a rate of investment return of 5% each year, yet and an individual sees a period where their portfolio falls by say 10%, but they continue drawing their income, might this impact upon the longer term sustainability of the income?

We have obviously been going through a market correction recently and so it is a time like this that such a review is sensible. This applies to those already in retirement and those building up to it. There are many questions that we see arise out of this:

  • Will I be able to afford to retire as planned?
  • Will my long term income be affected?
  • Do I need to change my income levels/expectations?
  • What happens if the markets recover quickly?
  • Do I have cash reserves that I can draw on for a period to give my portfolio time to recover, untouched?
  • Can I improve upon the tax efficiency of my income to reduce the gross amount that I draw but keeping the net figure constant?

Long term sensible planning will always help  to navigate through periods where markets suffer a correction without it having a lasting impact on your position. However, carrying out a review after such an event has occurred can be both sensible and reassuring. It can help to give you the comfort that your long held plans can remain unaffected and that you can still enjoy the retirement you have worked so hard for and at the time you planned to.

If you feel that such a review could be of use then do get in touch: matthew.bromley@cowgills.co.uk 


The value of investments and income from them may go down. You may not get back the original amount invested. Accessing pension benefits early may impact on levels of retirement income and your entitlement to certain means testing benefits is no suitable for everyone. You should seek advice to understand your options at retirement.

Posted by Matthew Bromley
6th May, 2020
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