Plenty of research may suggest 4% a year can be 'safely' withdrawn from pension pots over the long term but, writes Paul Tinkler, that comes with a number of caveats - in which case, can stochastic modelling help?
Decumulation, should you not be familiar with it, is all about the level of income that can safely be taken from a fund or portfolio, without eroding the capital over time. There is a lot of research around that would suggest around 4% a year is achievable over a reasonably long period of time - say, 25 years - using a portfolio of 50% equities/50% bonds. Clearly there is no certainty attached to this level when planning ahead, unless some form of guaranteed product is used - and I am not aware of any products offering that level of guaranteed income with a capital guarantee and ongoing ...
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