Decumulation and the beginning of your retirement journey, whatever that may look like for you personally, is a phase that comes with much change.

Beginning the process of drawing a replacement income from your accumulated & consolidated wealth can feel uncertain. Therefore having a plan as to how you can generate a sustainable level of replacement income from your wealth over the long term, allowing you to retain the standard of living you want becomes a top priority.

This requirement for a long term and sustainable income needs to be balanced with other ongoing objectives such as supporting family and the desire to leave a legacy.

Wealth Planning Considerations in the Decumulation Phase

Sustaining a regular income in decumulation requires a different approach to investment risk than for those in accumulation or consolidation. Careful consideration needs to be given to sequencing risk in particular, which refers to the order or sequence in which returns are received.

There are a number of income options from the state pension, rental property income, personal pensions, investments and annuities to name a few. The approach to drawing income from these assets should be as tax efficient as possible to further improve their longevity.

As lifestyles change and significant equity has been built up in main residences, downsizing is often an option considered to boost liquid wealth, reduce inheritance tax liabilities and allow for additional income generation or gifts to family where desirable or needed.

Ongoing cash flow planning is useful during periods of decumulation to provide a basis for recommended withdrawal rates and can help give an indication for what may be left for the next generation, all the while factoring in the erosive effect of inflation over the long term.

Are you in the Decumulation phase?

• You’re planning to or have entered a form of retirement.
• You’re at the end of a successful career or have recently exited/sold a business.
• You’re facing important decisions regarding the management of your assets e.g. pensions.
• You have significant assets that you’re planning to leverage for a your retirement income.
• You’re looking to optimise the drawdown of your assets to maximise longevity.