What does the Lifetime income show and why do I have a shortfall in Lifetime Income when my success rate is high?
If a client wants £40k a year in retirement income over a 30-year period, their income requirement over their lifetime is £1.2m in today's terms. This is the total Lifetime Income, in today’s terms. Depending on the withdrawal strategy, the client would be able to take more or less than this.
Reasons for the Lifetime income potentially having a shortfall while you have a high success rate could include applying dynamic spending rules and/or withdrawal strategies. For example, applying the Guardrails or the Boundaries. Other reasons include not adjusting the income withdrawn for inflation. If the withdrawal is not inflation adjusted, the Lifetime Income will show a shortfall to reflect the fact that withdrawals won't keep pace with inflation.
Please note that the total Lifetime income is not affected by the inflation or withdrawal rules strategy; it is based on the client's required income. The shortfall or excess is what results by applying the inflation rules strategy or spending rules strategy.