12th January 2017

FinalytiQ: Historical evidence of sequence risk in retirement portfolios

I know, I know. I’ve been banging on about the subject for some time now…  well, ehr…  since George Osborne uttered these seemingly harmless words ‘No caps. No drawdown limits. Let me be clear. No one will have to buy an annuity.”

And the reason I keep banging on about it is because sequence risk is perhaps the most significant risk for those looking to generate a lifetime income from a pension drawdown pot.

Sequence risk is the risk that the order of investment returns is going to be unfavourable. This risk exists at accumulation stage but it’s amplified by withdrawals from a portfolio during the retirement stage. If you get good returns in the early part of retirement, you’re unlikely to run out of money with a sensible withdrawal rate of say 4% or even 5%.… More

This post appeared first on FinalytiQ.

 

 

 

Investments, Abraham Okusanya, FinalytiQ

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