The chart below shows the potential impact a 10 per cent market fall could have on the sustainability of a portfolio.

Someone taking 4 per cent per year from a £100,000 pot would see their income sustainability score drop from 92.6 per cent to 81.5 per cent.

The situation gets more volatile as a bigger income is taken. 

According to our DGS statistics someone taking a relatively modest 5 per cent a year on a £100k pot would see the income sustainability of their pot slashed from 55.1 per cent to 28 per cent in the event of a 10 per cent market fall.

Sequencing of investment risk is another issue that advisers need to discuss with their income drawdown clients.

What many investors do not realise is that the order in which investment returns are generated can have a huge impact on the overall level of the fund over time.

In the charts below we take three different scenarios where a fund generates 4 per cent return on average over a period of ten years and we can see how significantly the outcomes vary.

The charts use the example of a £100,000 pot from which the investor is taking £5,000 per year (increasing by 2 per cent per year).

However, in the first chart the returns generated are a flat 4 per cent per year while in the second you see someone generating strong investment returns in their early retirement years before posting several years of negative returns.

In the final scenario someone experiences negative returns in the early years of taking an income before posting positive returns.

You will see the end result in all three cases is very different.

These are all issues that can have an enormous impact on a client’s retirement aspirations and shows how vital it is that advisers speak to their clients on a regular basis and keep them updated on the potential impact investment volatility can have on their income and help them to plan accordingly.

Lorna Blyth is head of investment solutions at Royal London Intermediary