Are your clients’ retirement drawdowns at risk of revision?

Many advisers may not realise it, but without a robust actuarial framework sitting behind retirement income advice, there’s a real risk clients will have to revisit - and potentially reduce - their drawdown amounts every five years.

In this article, Lifetime Retirement Income (Lifetime) Founder and Managing Director, Ralph Stewart explains how Lifetime is able to calculate income drawdown levels with close to 80% certainty over a 20-year period, significantly reducing the likelihood of future adjustments.

In our previous article, Why does everyone have to live to 90? we explored the challenges of longevity planning and argued that age 90 should be treated as a minimum planning horizon, not a ceiling. But investing for long enough is only part of the equation, Stewart says.

“The next crucial step is ensuring the income clients are promised can actually be maintained over time.”

Why drawdown stability matters

Too often, retirement income advice relies heavily on assumptions that haven’t been stress tested over long timeframes. Market volatility and other factors such as inflation, changing life expectancy and investment returns can undermine initial projections, forcing advisers into difficult conversations when drawdowns need revisiting.

Lifetime invests heavily in avoiding exactly these situations.

“We use Milliman’s Managed Risk Service to run regular probability assessments, helping to ensure the income levels we provide are genuinely sustainable,” Stewart explains.

Milliman is a global consulting firm specialising in actuarial science, capital markets, risk management and advanced modelling. This level of rigour is what Stewart believes sets Lifetime apart.

“It’s this discipline and actuarial oversight that makes our proposition so robust,” he says.

Managing volatility - not avoiding it

Lifetime uses Milliman’s modelling to maintain around a 60% exposure to growth assets for investors aged 65+, while actively managing volatility. This approach seeks to balance growth and risk in a way that supports a stable income over time.

Using actuarial principles, Milliman calculates optimal capital drawdown levels that have a targeted 80% probability of remaining unchanged over a 20-year period.

“This allows us to consistently avoid a common scenario advisers may face - having to tell clients their drawdown needs to be increased or worse, reduced, as often as every five years,” Stewart says.

The modelling behind the confidence

Using its defined assumptions around asset allocation, expected returns, volatility and inflation, Milliman runs 5,000 random market scenarios to test outcomes over different time horizons.

The results show that over a 20-year investment horizon, there is close to an 80% likelihood that the income drawdown remains sustainable without adjustment.

“We regularly review the assumptions and rerun the model to ensure the probabilities remain aligned with real world experience,” says Stewart.

“The result is greater certainty for clients - and peace of mind for advisers, who can avoid difficult conversations, while delivering a more stress-free, predictable retirement for clients.”

An example in action

Consider a couple investing $350,000, where the male partner is aged 67 and the female partner is 65. The analysis assumes:

• a life expectancy of 95 for both partners
• an annual inflation adjustment of 2%
• an adviser review fee of 0.50% per annum

Under these assumptions, Lifetime can project sustainable cash flow across retirement with a high degree of confidence.


Chart 3: A practical example

“It’s a strong position to leave a client in - particularly when you can say you’re around 80% confident those income levels won’t need revising. That’s the kind of retirement certainty I want,” Stewart says.

Get in touch

If you’d like to offer your clients greater certainty, fewer future revisions, and a more resilient retirement income strategy, get in touch with Chelsea Devlin at Lifetime Retirement Income.