Combining retirement income strategies

70% of investors want some form of guaranteed income in retirement*, and most also want to maximise the growth potential of their savings. The good news is they don’t have to choose. Clients can use Secure Retirement Income to create a guaranteed income that covers essential costs. Then they can invest remaining savings in flexi-access drawdown to maximise their growth potential. We’re currently the only platform in the UK that lets clients combine a secure income with the growth potential of flex-access drawdown, all in the same place. So why use one when you could have the best of both?

*Aegons second Readiness survey, November 2014

Investment priorities differ based on spending needs

Essential spending

Priority = security

Use Secure Retirement Income (SRI)

Discretionary spending

Priority = growth potential

Here’s an example:

Initial investment: £400,000

Age 65, Part-time work Essential spending £5,000

Action: Buy £5,000 SRI and invest the rest in FAD

Outcome: £5,000 Secure income, £13,800 Target income

Total income per year £18,800

Age 66, Fully retires Essential spending £10,000

Action: Release funds from FAD and buy £5,000 more SRI

Outcome: £10,000 Secure income, £7,800 Target income

Total income per year £17,800

Age 75, Downsizes house Essential spending £8,000

Action: Sell £2,000 SRI and use this to buy FAD

Outcome: £8,000 Secure income, £10,000 Target income

Total income per year £18,000

As at August 2015. Essential income need is in addition to the state pension. FAD figures assume steady 7% investment growth, income of 5% and combined product, fund and advice charges of 2%. SRI figures assume steady 4.5% growth, and combined charges of 3%.

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