The post-budget landscape features much higher inflation and taxes – both of which will challenge investors looking for income from their pensions and other investments. Their asset managers, wealth managers and financial advisers now need to take stock and see whether their income-producing strategies still work well.

Inflation looks as if it will reach at least 4% (latest OBR estimate) or around 5% (chief economist of the Bank of England view), which in itself will be quite a blow to investors’ spending power. More serious is whether elevated inflation rates become entrenched – and on that point, the jury is still out.

And then there are the tax increases. The higher tax and national insurance rates announced this year haven’t yet hit but will do so all too soon. A few years of fiscal drag will carve palpable cuts into retirees’ spendable incomes. Post-budget, prosperous retirees are already busily calculating whether the announced cut to alcohol duty on champagne will be enough to offset the increased air passenger duty on their long-haul flights to South Africa and the Maldives.

Advisers should be recalibrating their clients’ cash flow modelling to see what the implications are for their long-term sustainability.

One investment planning strategy will come under particular pressure – bucketing that involves holding lots of cash to mitigate investment market crashes. Holding several months’ worth of spending – in some cases we’ve heard several years’ – is seriously vulnerable to 4 or 5 percent inflation. That represents a large guaranteed loss of capital value. The alternative of short-dated bonds is hardly any more attractive. Long duration bonds look decidedly iffy as interest rates look dangerously poised to rise.

Bucketing is a strategy with which many advisers and their clients are really comfortable. But it comes at a cost. Rising tax and inflation has just driven up that cost.