21 March 2026
How we stress-test a retirement income sequence
A sustainable retirement income is less about a single withdrawal percentage and more about sequencing State Pension, defined benefit income, and drawdown across market cycles.
Clients often arrive quoting a rule of thumb for safe withdrawal. Rules of thumb ignore the order of returns, the date State Pension begins, and whether a defined benefit scheme already covers a slice of essential spending.
Our stress test starts with essential versus discretionary spending. Essential costs need reliable income sources first: State Pension, any final-salary income, and annuity purchase if that fits temperament. Discretionary spending can flex when markets fall.
We then model two retirement start dates and three market paths — a mild sequence, a harsh early-years sequence, and a late-recovery sequence. The point is not to predict markets. It is to see whether the plan still funds essentials when the harsh path arrives in the first decade.
Annuities are not a relic. For clients who value certainty over flexibility, securing a portion of essential spending with an annuity can make remaining drawdown easier to live with. We show both hybrid and pure-drawdown cases without steering clients toward a product they have not asked for.
If you are within five years of leaving work, Retirement Income Planning sessions spend most of the time on these sequences rather than on fund selection alone. Bring estimated State Pension forecasts and any defined benefit quotations you hold.