Types of retirement income risk

Financial reliability risk

This is the risk that if you died, your partner or someone reliant on your retirement income, would face a significant, negative financial impact.

Health risk

Health or lifestyle factors can create a risk that you will not receive enough value from your capital investment in terms of income return.

Investment performance risk

Under-performance from an investment or even over ambitious investment performance can have a detrimental effect on anticipated outcomes.

Inflationary risk

The risk of the rising cost of living eroding the future value of capital and/or income.

Legislative and taxation risk

The risk that changes in legislation and taxation impact upon a particular strategy.

Liquidity risk

Access to capital needs to be provided for unforeseen expenditure costs. Deposit-based savings provide this, but they need to be sufficient to avoid accessing the investment capital that is providing your retirement income. Insufficient capital reserves could mean needing to access investment capital at a time when values are depressed or the tax position is not favourable.

Longevity risk

The risk of you outliving your money.

Timing risk

The risk of trying to ‘time the markets’ and make decisions based on an idea of future market movements, or other financial factors such as interest rates or inflation.

Please also refer to our Document Appendix-Risk