STRUCTURING INVESTMENTS TO SUPPORT RETIREMENT INCOME GOALS
How advisers can manage sequencing risk while supporting client confidence and sustainable income in retirement.
Navigating a sea of uncertainty
Converting retirement savings into a sustainable lifetime income may be simple to describe, but difficult to achieve in practice. While annuities offer certainty for some clients, many prefer an invested solution that retains flexibility and access to capital.
For these clients, retirement income planning often involves selling assets over time. This brings additional challenges, including sequencing risk and the need to balance short‑term income certainty with long‑term growth. Cash buffers and bucketing strategies are commonly used to help address these challenges, but their effectiveness depends heavily on how they are structured and managed.
Advisers must balance how income is withdrawn with how assets are invested and rebalanced to support it. The interaction between these decisions can ultimately determine whether a retirement plan succeeds or fails.
An investment solution is only optimal if a client is prepared to use it.
Key considerations
Sequence of returns risk
When income is generated by selling assets, poor returns early in retirement can have a disproportionate impact on income sustainability - particularly if withdrawals are taken during market stress rather than from a buffer.
Downside risk and volatility
Limiting losses can help preserve capital, but reducing volatility alone is not enough if it comes at the expense of long‑term growth or leads to excessive allocations to cash.
Bouncebackability
How quickly a portfolio recovers after a market fall is critical. Rebalancing approaches that prevent portfolios from participating fully in recoveries can undermine long‑term outcomes.
Behavioural confidence
Buffers and buckets can give clients confidence to continue drawing income during volatile periods, helping them avoid poor decisions at the wrong time.
Why FutureLegacy
Investing for retirement income requires more than simply reducing volatility. Portfolios must also be able to recover effectively after market falls while supporting ongoing withdrawals. This balance is difficult to achieve using rigid cash buffers and bucketing rules alone.
The FutureLegacy fund range has been designed to address many of the challenges highlighted in this paper. As a volatility managed, multi asset solution, it combines diversified growth assets with active risk management and disciplined rebalancing. This helps limit downside risk while improving a portfolio’s ability to participate in market recoveries - enhancing “bouncebackability”.
By maintaining a consistent risk profile and actively managing asset allocation, FutureLegacy can help reduce the cash drag and one way rebalancing issues often associated with traditional bucketing strategies. The range can be used on a standalone basis or alongside a simplified cash buffer, allowing advisers to retain the behavioural benefits clients value while supporting more resilient long term outcomes.
Discover more
For a deeper examination of how buffers, buckets and rebalancing interact in retirement portfolios and how different implementation choices can affect outcomes read the full paper.
The value of investments can fall. Investors may not get back the amount invested. Income from investments may vary and is not guaranteed.
3212200 Expiry: 25 March 2027
