A decumulation portfolio must be able to deliver appropriately risk-adjusted returns through a variety of economic environments and so, argues James Johnsen, cannot be overexposed to a few key risks.
Earlier this year, a report from retirement specialist Aegon challenged the old ‘rule of thumb' calculation that people can take a 4% annual income from their pension drawdown pot without running out of money. The report argued that a 65-year-old retiring this year and taking a 4% income has a 20% chance of running out of cash if they live to the age of 95. It also suggested that retirees should take no more than 2.8% if they want a 99% chance of not running out of cash. This should give retirees pause for thought. The original 4% rule was developed by US adviser William Bengen in 199...
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