Lifetime Income is the sum total of all income (adjusted for inflation) during the client's lifetime. 

There are two aspects of this metric; 

  • the required lifetime income: this is the total income required by the client
  • the actual lifetime income: is the total withdrawal from the portfolio for any given scenario. 

Timeline compares this required lifetime income to the actual total withdrawal from the portfolio in a given percentile scenario.

For example, if a 65 year old requires an income of £40,000 a year for 30 years until age 94, then the Lifetime Income required is £1.2m (i.e £40,000 X 30).  Suppose, the withdrawal strategy only supports a total of £1m in the bottom 10th percent scenario during the stated retirement period. The result is a shortfall of £100k in Lifetime Income. 

Timeline expresses the actual and required lifetime income in real terms.

There are a number of reasons why the actual lifetime income may be less or more than the required income, for any given scenario. 

  • If the portfolio runs out of money in a given scenario before the end of the planning period. 
  • If a withdrawal strategy increase/decreases the actual withdrawal depending on the portfolio performance. For instance, the Guardrails strategy reduces the income during periods of poor performance (and vice-versa). Accordingly, the actual lifetime income may be lowered than the required income, even if the portfolio doesn't run out of money. 
  • If withdrawals are not adjusted for full inflation. 

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