Is your retirement proposition fit for purpose? Five retirement planning questions for advisers

The choices available when people retire have increased, but this has also made things more complicated for financial advisers. These five questions can help you check whether your clients’ retirement plans support solid income planning, sustainable withdrawals, and good results for clients throughout the withdrawal phase.

Since 2015, there have been many more options available to people when they retire. But this greater choice has also made the business of giving good advice more complex. 

The Financial Conduct Authority (FCA) has recognised this. Its review of retirement income highlights the value of consistent processes, clear evidence, and robust procedures when planning how people withdraw money from their pensions. Together, these provide a strong foundation for a good retirement plan.

For many advisers, the real question isn't whether their client’s retirement plan worked well in the past. It's whether it's still suitable for people retiring now in the future. To plan effectively for retirement, advisers need to combine a clear income strategy with repeatable processes, suitable retirement income options, and regular reviews.

Here are five questions that can help advisers assess and strengthen their approach to retirement income planning:

Does your retirement plan distinguish between different client groups, rather than taking a one-size-fits-all approach?

Not all clients who are retiring are the same. A client a few years away from retirement has different needs than someone who just retired last year. Both are very different from someone in their late seventies who’s thinking about later life, including leaving money behind for family.

A good retirement plan should recognise at least four general stages: before retirement, just retired, settled into retirement, and later life. Each stage has different income needs, risk levels, and planning priorities. A service model that recognises these differences is more likely to support clients effectively and meet regulatory expectations.

How clearly have you defined your clients’ retirement income needs?

A useful framework for retirement income planning is to divide expenses into three broad groups. Essential expenses, like housing, utilities, and food, are the base. Lifestyle spending covers things that make retirement enjoyable, such as travel, hobbies, and occasional treats. Discretionary spending includes everything else. That includes gifts, help with grandchildren's school fees, and charitable donations.

Mapping this out carefully has practical benefits. It helps determine how much income a client truly needs, how flexible the plan can be, and where adjustments could be made if circumstances change. A clearly defined view of what the client needs provides a stronger foundation for retirement income planning.

How does your approach account for poor investment returns early in retirement, longer lives, and inflation?

The way risk was assessed during the accumulation phase was designed for a different goal. When the aim is to grow money over 30 years, short-term market ups and downs may be less significant. But when the goal is to draw a steady income from retirement savings, short-term market falls can have a much greater effect, especially in the first few years of retirement when the impact of a poor sequence of returns is greatest.

A few years of poor investment returns just when a client is starting to take money out of a pension can weaken a retirement income plan in ways that a later recovery may not fully offset. Add to this the (pleasant) possibility of living much longer than expected and the risk of inflation eroding the value of income over time, and it becomes clear that the risks clients face in retirement need a specific approach to ensure sustainability of withdrawals. 

Testing income plans against difficult scenarios is a prudent part of the planning process. It reflects the approach the FCA has been encouraging and can help give clients greater confidence in the resilience of their plans.

What evidence supports your approach to sustainable withdrawals?

One notable aspect of the FCA's stance was its recognition that there isn't one single correct way to manage retirement income. Using natural income sources, sustainable withdrawal strategies, different investment pots, and smart ways to take out money tax-efficiently can all have a place, depending on the person's situation, goals, and how they feel about flexibility.

What's important is that the choice of these withdrawal strategies is made deliberately, recorded, and reviewed. A withdrawal strategy chosen when someone retires should be treated as a starting point and revisited regularly to keep it aligned with what is best for the client. As situations change, including health, family, spending habits, and market conditions, so should the approach to taking out income.

Is your retirement withdrawal plan clearly documented and regularly reviewed?

In many ways, this question ties all the others together. FCA guidance emphasises that retirement income advice should be supported by regular reviews, thorough cash flow modelling, meaningful stress testing, and clear records of how and why recommendations were made.

Retirement cash flow planning is an ongoing process. It should be a living document that reflects changes in client goals, updated spending estimates, and revised income projections.

A systematic review process can help advisers demonstrate that the plan remains suitable over time. It also provides a consistent record of how the client’s circumstances and the advice have evolved.

Here’s a checklist for advisers to assess their retirement income planning:

• Client segmentation: Does your service differentiate between the needs of those not yet retired, newly retired, established in retirement, and in later life?
• Retirement income needs: Have you separated essential, lifestyle, and discretionary spending?
• Retirement income strategy: Does the recommended approach match the client's goals, need for flexibility, tax situation, and ability to handle risk?
• Pension decumulation: Does your client’s withdrawal plan consider the risks of poor investment returns early on, living longer than expected, and inflation in retirement?
• Withdrawal strategies: Have you tested sustainable withdrawal strategies against difficult market conditions, changes in spending, and a longer-than-expected retirement?
• Retirement income portfolios: Are the investments and retirement income solutions designed specifically for taking money out as well as for building savings?
• Ongoing suitability: Are cash flow modelling, stress testing, assumptions, recommendations, and decisions about reviews clearly documented?
• Regular review: Is the retirement income plan revisited when markets, tax laws, health, family situations, or spending needs change?

Making your retirement plan work better

Effective retirement income planning brings together a range of considerations beyond how money is drawn from savings. It benefits from a retirement plan that can be repeated, documented, and adjusted. The plan should support people from the final years of saving through to taking money out of their pensions and planning for later life, while helping to ensure that the retirement income strategy continues to fit the life they’re living.

For advisers helping people take money from their pensions and investment portfolios, retirement income solutions specifically designed for sustainable withdrawals can be important parts of a broader retirement plan.