Withdrawal order: making the most of retirement assets

11 February 2020 | Topical insights


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Retirees in the UK face more challenges than ever before when it comes to retirement planning. The rise of defined contribution plans, pension freedoms, increased longevity and other factors have made retirement planning considerably more complex.

Arguably foremost among these challenges is how to convert the retiree's accumulated retirement savings into a sustainable income that may need to last 30 years or more. A key to accomplish this is to select the proper withdrawal order when deciding which accounts to spend from.

This paper looks at three withdrawal orders across three crystallisation strategies. Using our Vanguard Capital Markets Model (VCMM), we simulate the impact of withdrawal order and crystallisation strategy on a number of success metrics over a 30-year time horizon.

Our analysis shows that, for most investors, withdrawing from taxable accounts first provides the best results.

 Withdrawal order: making the most of retirement assets


Investment risk information:

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. Past performance is not a reliable indicator of future results.

Other important information:

For professional investors only (as defined under the MiFID II Directive) investing for their own account (including management companies (fund of funds) and professional clients investing on behalf of their discretionary clients). Not to be distributed to the public. It is for informational purposes only and is not a recommendation or solicitation to buy or sell investments.

The opinions expressed in this article are those of the author and may not be representative of Vanguard Asset Management, Limited.

Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority.

© 2020 Vanguard Asset Management, Limited. All rights reserved.


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