Back
Retirement Planner · Track 2
G7 of 9 — Input guides

Guaranteed income

Guaranteed income — State Pension, defined benefit pensions, annuities — is the most valuable asset in a retirement plan. It offsets expenses before the portfolio is touched, reducing drawdown and dramatically improving longevity.

Monthly portfolio drawdown — with vs without State Pension (£11,502/yr from age 67) £60k £30k £0 State Pension starts Age 67 — £959/mo With State Pension Without
How to configure it
1
Add income sources in the Guaranteed income section

Go to the Contributions & Income tab and scroll down to Guaranteed income. Click a category from the left panel — State Pension, Defined Benefit, Annuity, Rental Income, or Other Guaranteed — to add a card. Enter the annual or monthly amount, set the frequency, and tick Infl. if the income is inflation-linked.

Guaranteed income section showing State Pension at £11,502 annually inflation-linked starting at Custom age 67, and Defined Benefit at £2,730 monthly inflation-linked starting At retirement
The full new State Pension is approximately £11,502/year in 2025/26 with 35 qualifying NI years. Enter your actual projected amount from your State Pension forecast at gov.uk.
2
Set the start age using Custom age

Each income card has Starts controls identical to expenses — Now, At retirement, or Custom age. State Pension should always use Custom age set to 67 (or your actual State Pension age). A DB pension may start at retirement or later. Getting this right is critical — the engine uses the start age to determine when the income offsets portfolio withdrawals.

A common mistake is leaving State Pension set to At retirement. If you retire at 60 but State Pension starts at 67, the portfolio must bridge a 7-year gap entirely unaided. Always use Custom age for State Pension.
3
Verify on the Expense & Income Timeline

After adding income sources, check the Summary tab’s Expense & Income Timeline. Guaranteed income appears as green dots (annual) or bars (monthly). Confirm each source starts at the correct age and runs to end of plan. The gap between retirement and State Pension start age should be clearly visible as a period with no green income.

Expense and Income Timeline showing contributions as blue bars stopping at retirement, essential expense bands in red and orange, and State Pension as green dots starting at age 67
How the engine uses guaranteed income
4
Offsets expenses before portfolio drawdown

Each month, guaranteed income flows into the cash buffer first. Expenses are then deducted. Only if the buffer falls below the minimum does the engine trigger a withdrawal from the portfolio. Once State Pension starts, the portfolio funds only the gap between expenses and guaranteed income — often substantially less than the full expense requirement.

Monthly processing order: (1) guaranteed income arrives in cash buffer, (2) expenses are deducted, (3) if buffer is below minimum, a withdrawal is triggered from the portfolio. This order ensures guaranteed income always reduces the withdrawal amount first.
5
The multiplier effect

£1,000/month of guaranteed income from age 67 over a 23-year period to age 90 represents approximately £276k of withdrawals that never need to come from the portfolio. At a 3.5% withdrawal rate, this is equivalent to having an extra £340k in the portfolio at retirement — without contributing a penny more.

This is why delaying a DB pension or annuity purchase by a few years — bridging from the portfolio in the interim — can materially improve long-term outcomes. The bridging cost is often less than the actuarial uplift from delay.
What changing guaranteed income does to outcomes
6
Higher guaranteed income reduces sequence-of-returns risk

When expenses are largely covered by guaranteed income, the portfolio can weather a bad early sequence without being heavily drawn on. Bad scenarios (P10) improve more than good ones (P90) — because in good scenarios the portfolio was fine anyway. The cumulative success probability curve shifts up across the entire horizon, and the plateau after retirement is higher and flatter.

Cumulative success probability chart showing probability stabilising after the drop at retirement age and maintaining a high plateau through the horizon
7
Model the bridging period explicitly

If you retire at 60 but State Pension starts at 67, the portfolio is under full pressure for 7 years before income relief arrives. Model this explicitly — do not average the State Pension income across the full retirement period. The engine handles the step-change correctly only if the start age is set accurately. Use the What-if tab to compare retiring at 60 with and without an annuity to bridge the gap.

Track 2 · G7 of 9