You can offer your clients the kinds of stocks which have growth potential and deliver a modest yield.

Finally, it opens the possibility of tax benefits as capital gains tax rates are lower than income tax rates.

In a bear market

Clients will be nervous about drawing from capital when markets are enduring a bear market or correction, because this is when each withdrawal makes the biggest hole in their savings.

How much of a problem this might be will depend on the amount of income being withdrawn relative to the value of the portfolio. If there is a fixed monthly withdrawal, your investment manager can devise a diversified portfolio that can, to some degree, accommodate market swings.

Advisers might also suggest their clients hold six to 12 months of spending in ready cash specifically for a market correction.

If markets take a particularly vicious dip then they can postpone drawing income and rely on cash while waiting for a recovery, replenishing cash savings on a bounce-back.

Change of mindset

The tradition of living off income in retirement is often driven by a client’s desire to leave a legacy – wealth accumulated over a lifetime (or several lifetimes).

But this can expose a portfolio to enhanced risk and lost opportunity.

Drawing on a combination of income and capital requires a change of mindset but is safer in the long term and can ultimately mean a client leaving more to the next generation.

Billy Hughes is a portfolio manager at James Hambro & Partners