Question 1

Will this income actually last?

Accepted Answer

Nobody can tell you that, and a page that gave you a monthly figure without saying so would be describing a guarantee nobody gave. What this page can tell you is the return the corpus has to earn for it to last the years you asked for, and how long it lasts across a range of returns. If the hurdle is comfortably below what you think the money will earn, you have margin. If it is above, the plan is asking for something.

Question 2

Why lead with a rate rather than the income?

Accepted Answer

Because the income is the thing you chose and the rate is the thing you are betting on. Printing the income back at you tells you nothing you did not type in. The hurdle is the assumption the plan rests on, and it is the only figure here that does not move when your forecast does.

Question 3

What about tax on the withdrawals?

Accepted Answer

Every withdrawal is a redemption, so each carries a capital gains consequence, and how much of a given withdrawal counts as gain depends on the cost of the units actually sold. This page does not model that and does not guess it, so the income and the total drawn are both before tax. Your real income is lower, and by how much depends on your holding period and what else you have booked in the year.

Question 4

Why is the order of returns not modelled?

Accepted Answer

Because a single average return cannot express it, and pretending otherwise would be the same mistake as quoting a guaranteed income. A poor few years early in a drawdown does far more damage than the same years later, since you are selling units while they are cheap. The table of outcomes is the closest honest substitute: it shows the plan against a range rather than one line.

Question 5

Should I not just invest the lump sum at once?

Accepted Answer

Often that finishes ahead, because the money is in the market for longer. The STP page compares the two directly and usually shows the lump sum in front. What a staged transfer buys is a smaller regret if the market falls just after you invest, which is a question about how you would feel rather than about arithmetic.

Question 6

What happens if the source fund runs out early?

Accepted Answer

The transfer simply stops and everything is in equity from that point. The page says so when it happens, because it means more exposure earlier than the plan you described, and that changes the risk of the drawdown that follows.

Lump Sum to Monthly Income