Reading a drawdown illustration without the marketing fog

Drawdown illustrations arrive looking decisive: a rising line, a round income figure, a reassuring colour palette. Treat them as starting points, not promises.

What the central scenario assumes

Most illustrations use assumed growth rates and inflation figures that may not match your portfolio. Ask which growth rate was used, whether charges are deducted before or after growth, and whether the income figure is fixed or rising with inflation.

If the illustration shows income lasting to age 95 at a 5% withdrawal from a cautious portfolio, ask for a second run at 3.5%. The difference often changes the conversation more than any fund brochure.

Sequence risk is quiet until it is not

Taking high withdrawals in a falling market early in retirement can shrink the pot faster than the average-return chart suggests. A retirement income review should pressure-test a bad first decade, not only a smooth average path.

Annuity comparisons still matter

Even clients committed to drawdown benefit from seeing what a portion of the pot would buy as an annuity at current rates. You may still choose flexibility — but the comparison keeps the decision honest.

If you are within five years of leaving work, bring your latest SIPP or workplace statement and a monthly spending figure. We can build a plainer illustration than the one that arrived in the post.