This paper joins the debate on how to improve pensioners’ incomes. Decumulation is a process where assets that have been built up earlier in life are converted into incomes to last throughout retirement. Not only are growing numbers of people entering this phase but decumulation decisions are becoming more important.
Changes in longevity mean people can expect to spend longer in retirement – a person who retires at 65 in 2035 will have a one-in-four chance of retirement lasting three decades – and so they must make even more of the financial and housing assets they have accumulated. Retirees will need to understand and manage financial products’ risks with the end result that pension choice will be even more important. Retirees will also need to look to housing wealth to improve outcomes, which makes decisions around downsizing and the use of equity release critical. These changes create a need for industry and government to raise their game.