Rethinking retirement – a smarter approach to drawdown

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Using accumulated savings to create a sustainable lifetime income, whilst preserving access to capital, is a primary objective for many retiring clients¹. But we understand it can be challenging for advisers to reliably achieve this in all market cycles.

It’s likely that the financial challenges many clients at retirement now expect to face have changed from when they made their initial plans.

For example, twenty years ago life expectancy was 78 years for men, and 82 years for women². Today, men aged 61 have a 25% chance of living to age 92 – and for women aged 61, it’s a 25% chance of living to age 95³.

Life expectancy is however just an average. In many cases you’ll plan for clients living much longer – perhaps 35 years in retirement – particularly if they’re a non-smoker in good health.

And deciding how much to spend each year in retirement is complicated when the retirement length and asset returns are unknown.
 

Spend or save

Running out of money is the concern financial advisers hear most from clients when transitioning from saving to spending in a way that balances security with everyday enjoyment⁴. And perhaps in reaction to this, we’re witnessing significant market growth for guaranteed income products which offer a reliable income for life to help cover essential expenses. The latest figures from the ABI show 2024 sales increased by 34% to £7bn - reaching a ten-year high⁵.

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The fear of outliving savings may lead to a spending reluctance amongst retiring clients. A 2024 study found that retirees only spend around 75% of what they could actually afford⁶. With cost of living increases, unknown life expectancy and geopolitical uncertainty, you may find some clients increasingly reluctant to spend retirement savings on what they might consider luxuries such as holidays.
 

Creating a reliable, sustainable income doesn’t need to be hard work

This creates the challenge of producing a retirement income strategy that offers greater income certainty, with the flexibility to adapt retirement plans as clients’ needs change.

You may have tried blending an annuity and drawdown plan to solve this puzzle for clients, but found the process clunky and the admin unwieldy.

We understand the demand for a better way, which is why we’ve launched our new Guaranteed Lifetime Income plan –an innovative solution where flexibility and certainty work together – seamlessly.
 

Retirement income, all joined up

Our Guaranteed Lifetime Income plan is designed to offer something different.

It’s available on the Fidelity Adviser Solutions platform and held within a Flexi-access Drawdown Account, alongside clients’ other drawdown investment solutions. Income is paid from the Plan to the drawdown cash account, enabling you to manage a client’s retirement income in one place - providing the flexibility that many clients want, with the certainty of guaranteed income for life.

Any income from the Plan that isn’t needed for withdrawal can be held in a client’s drawdown cash account or re-invested within their Flexi-access Drawdown Account. The client won’t be liable to income tax until they withdraw income into their chosen bank account.

Our Plan, integrated on platform, provides income security for you to satisfy the primary needs of your clients – while mitigating their longevity risk.

And it puts you in control, so you can simply and efficiently maintain the investment and withdrawal flexibility that’s needed to help clients adapt their retirement plans.

This helps you build resilience into clients’ retirement income strategies and withdrawal profiles and allows clients to enjoy the best of both worlds. They’ll have the reassurance of a predictable income stream to help cover their essential spending – and the ‘license to spend’ on discretionary things like hobbies, and memorable experiences.

Explore our Guaranteed Lifetime Income plan.

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