The retirement wave

A flexible approach to retirement income planning

Our recent article on the different theories on the shape of income in retirement introduced “The Retirement Wave”.


Unlike other theories, the “Wave” shows how the change from work to retirement is increasingly not a single, one-way event. It’s becoming a much more flexible journey, which has implications for how retirement income needs to be planned.


Retirement wave income needs graph

Research shows that around one in four UK retiree’s return to work within five years of retirement.1 This has become known as “unretirement”, with people moving between work, retirement, and back becoming increasingly common. This trend is primarily driven by increased life expectancy. As people live longer, they expect to have a longer retirement too, but overlook the fact they’ll need to work longer to support the financial cost of these extra years. Our own research shows that over 25% of those aged 65-74 feel they are still not adequately prepared financially for their retirement.2

For those approaching retirement, the rise of a more flexible retirement journey has several important implications.


The move back and forth between working life, retirement and work again means income needs can vary considerably over the course of a person’s life. This increased complexity makes it vital that people seek out advice to help them make appropriate plans for the years ahead.

With the need for different income levels becoming less clean cut, there is a greater need for advisers to have a regular, ongoing relationship with clients. Once the initial advice has been provided and plans are put in place, a regular review becomes essential. The review ensures a client’s income continues to best match the reality of their changing retirement lifestyle and expenditure requirements.

Furthermore, as clients age, their ability to make sound financial decisions can decrease significantly throughout their retirement. Clients are therefore likely to need more support from family and/or power of attorney in adviser client meetings. As well as needing advice on financial planning, they will also likely benefit from help with issues such as estate planning, or how to fund long-term care.


A more fluid retirement means the solutions chosen to deliver a client’s retirement income needs have to be adaptable to meet their changing circumstances and financial situation. Our research has shown that two of the main priorities for Defined Contribution pension customers are flexibility and access, which is why Drawdown has replaced annuities as the solution of choice for retirement income. Between April 19 - March 20, 190,000 pension pots were moved into drawdown.3

Many clients moving into drawdown still decide to take all their available tax-free cash at once. However, with increased demands for flexibility, and seeking out the optimal set of options, it may not be the best decision. Phased withdrawals (combining small, regular amounts of tax-free cash and taxable withdrawals) could better meet income needs and reduce tax. It may potentially also increase how long their money could last, which is especially important during periods where retirement income needs are lower due to either going part-time, or returning to work. 

fact 190,000 pension pots were moved into drawdown


With more people staying invested during retirement and drawing down income as required, clients are looking for certainty their income will last as long as needed.  Many are looking for a middle ground between the flexibility and access offered by drawdown, and the certainty of an annuity. This has led to a demand for innovation from drawdown investment strategies that mitigate the different risks faced by investors, such as sequence risk and inflation. 

Nobody can predict volatility, and it’s a normal part of investing. Although it cannot be predicted, it is possible to respond to it, reducing the impact for customers taking withdrawals, especially in the early years of retirement. Any investment strategy you recommend should balance exposure to growth assets whilst offering some ability to manage the impact of potentially damaging market volatility and at a cost acceptable to the client.

It’s clear the changing pattern of retirement shown by the retirement wave poses both issues and opportunities for retirement planning. Adaptable, innovative and flexible products can go some way to help meet the changing needs and circumstances of clients both approaching and during retirement.


Retirement Account can support your clients’ changing needs to and through retirement, with a range of flexible investment, income and charging options.

  • Our low cost multi-asset Retirement Portfolio Funds are designed to manage significant volatility to help your client’s drawdown pension pot last longer using an innovative Dynamic Volatility Management process (DVM).
  • Our automated Drip-feed Drawdown functionality can help you achieve a tax-efficient and sustainable retirement income for your clients, by giving them greater control over the level of taxable income they receive in retirement, and can also save you time through online automation.
  • We’ve no additional service charge for drawdown, which means less barriers to your clients taking their income and reinforces to them that Retirement Account is a plan for life.

If or when your clients need a guaranteed income, then it’s easy to buy an annuity from Scottish Widows as well.

1  The University of Manchester King's College London, Returns to work after retirement: a  prospective study of unretirement in the United  Kingdom, 2017.

2  Scottish Widows Retirement Research, 2018.

3   Financial Conduct Authority, Retirement Income Market Data, 2018/19

What do you want to do next?


Combining Flexible-Access Drawdown and Annuities can provide retirement income for your clients that need both flexibility and security.

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