{"id":47,"date":"2017-11-28T00:00:00","date_gmt":"2017-11-28T00:00:00","guid":{"rendered":"https:\/\/www.retirementrefined.com\/index.php\/2017\/11\/28\/retirement-income-withdrawal-strategies\/"},"modified":"2017-11-28T00:00:00","modified_gmt":"2017-11-28T00:00:00","slug":"retirement-income-withdrawal-strategies","status":"publish","type":"post","link":"https:\/\/www.retirementrefined.com\/retirement-income-withdrawal-strategies","title":{"rendered":"Retirement Income Withdrawal Strategies"},"content":{"rendered":"<h2 style=\"text-align: center;\"><strong>Withdrawal Strategies <\/strong><\/h2>\n<h2 style=\"text-align: center;\"><strong>For <\/strong><\/h2>\n<h2 style=\"text-align: center;\"><strong>Retirement Income<\/strong><\/h2>\n<p>&nbsp;<\/p>\n<p>Pre-Retirees and current Retirees should thoroughly review the potential impact of the various retirement income withdrawal strategies to make a pro-active, informed decision as to which strategy is most efficient for their retirement income.<\/p>\n<p>&nbsp;<\/p>\n<p>Deciding how to arrange your investment assets for retirement income is one of the most important decisions you will have to make.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Strategies typically fall into 1 of 5 categories:<\/strong><\/p>\n<ul>\n<li><b><strong>Systematic Withdrawal <\/strong><\/b><\/li>\n<li><strong>Flooring <\/strong><\/li>\n<li><strong>Time Segmentation (Bucket Approach) <\/strong><\/li>\n<li><strong>Interest\/Dividend only<br \/>\n<\/strong><\/li>\n<li><strong>Bond\/CD Ladder<\/strong><\/li>\n<\/ul>\n<h2 style=\"text-align: center;\"><\/h2>\n<h2 style=\"text-align: center;\"><strong>Systematic Withdrawal Strategy<\/strong><\/h2>\n<p>&nbsp;<\/p>\n<p>The most recognized strategy is the Systematic Withdrawal using the \u201c4%\u201d rule which states that you begin your retirement by withdrawing 4% of the total value of your retirement accounts in retirement year 1. Each year thereafter, you increase the 4% by the announced inflation rate.\u00a0 If inflation increased by 5%, your second year withdrawal would be 4.2% and the process continues indefinitely.\u00a0 The concern with the 4% rule is that portfolios were tested\u00a0 based on the past investment history using a much higher rate for the return on bonds than is currently available so many advisors believe 4% is too aggressive in the current environment.\u00a0 There are many variations of the 4% rule, some using 3 or 3 \u00bd% and some have mechanisms that will trigger you to change the percentage based on what happens in the markets.<\/p>\n<p>&nbsp;<\/p>\n<h2 style=\"text-align: center;\"><strong>Flooring Strategy<\/strong><\/h2>\n<p><strong>\u00a0<\/strong><\/p>\n<p>Flooring refers to separating your \u201cFixed Income\u201d needs from your \u201cLifestyle or Discretionary Income\u201d needs. The goal is to arrange that your \u201cFixed Income\u201d needs are covered by \u201cguaranteed income\u201d sources such as Social Security, Pensions and other products that can produce a guaranteed income stream.\u00a0 To meet your \u201cLifestyle or Discretionary Income\u201d needs, a Systematic Withdrawal strategy is often paired the Flooring strategy.\u00a0 In order to arrange 100% of your total income needs by the flooring strategy may require a significant greater amount of money and may lead to limited liquidity to meet your on-going unexpected needs.<\/p>\n<p>&nbsp;<\/p>\n<h2 style=\"text-align: center;\"><strong>Time Segmentation (Bucket Approach)<\/strong><\/h2>\n<p><strong>\u00a0<\/strong><\/p>\n<p>A Time Segmentation (Bucket Approach) divides your assets into separate investment accounts that are specific to your time horizons. For example, in \u201cBucket #1\u201d you may invest 3 to 5 years of your income needs invested in a conservative manner.\u00a0 The idea is not have to be forced to ever sell an investment at an inopportune time.\u00a0 In Bucket #2, you place investment assets to meet your income needs beginning for your intermediate term needs, such as years 5 through 15.\u00a0 A typical investment allocation would be 40% equities and 60% fixed income assets.\u00a0 The balance of your funds would be invested for years 16 on. The allocation can more heavily weighted towards stocks because of the length of your time horizon.\u00a0 The overall idea is to match risk of your investments to the specific time horizons of your income needs.<\/p>\n<p>&nbsp;<\/p>\n<h2 style=\"text-align: center;\">I<strong>nterest\/Dividend only<\/strong><\/h2>\n<p><strong>\u00a0<\/strong><\/p>\n<p>Those were the years, where you could invest in Certificates of Deposit, Stocks and Bonds that produced a much higher income than you can obtain today. Many people lived comfortably for years.\u00a0 This typically enabled an investor to leave the principal value of their accounts alone to hopefully increase in value in addition to the income produced.<\/p>\n<p>&nbsp;<\/p>\n<h2 style=\"text-align: center;\"><strong>Bond\/CD Ladder<\/strong><\/h2>\n<p><strong>\u00a0<\/strong><\/p>\n<p>A variation of this approach is to arrange Certificates of Deposit and\/or bonds where a security matures each year based on your projected income need. You use some of the matured funds for income and use the balance to purchase to another CD or bond on the long end of the ladder.\u00a0 In addition to producing your current income, this enables you to not time the bond market and guess about interest rates.<\/p>\n<p>&nbsp;<\/p>\n<h2 style=\"text-align: center;\"><strong>What\u2019s Most Important<\/strong><\/h2>\n<p><strong>\u00a0<\/strong><\/p>\n<p><strong><em>The most important question is which strategy or combination of strategies may work best for you? <strong><em>The most efficient way to determine your recommended strategy is to do a comprehensive Retirement Income Plan which will forecast your income needs throughout retirement and will compare various strategies so you can determine the best course of action.<\/em><\/strong><\/em><\/strong><\/p>\n<p><strong><em>\u00a0<\/em><\/strong><\/p>\n<p><strong><em>For a listing of our upcoming Retirement Income Planning and Retirement Tax Workshops, please click here<\/em> <a href=\"https:\/\/retirementrefined.com\/iraretirement-tax-planning-workshop\/\">Retirement Income Planning Workshop<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Withdrawal Strategies For Retirement Income &nbsp; Pre-Retirees and current Retirees should thoroughly review the potential impact of the various retirement income withdrawal strategies to make a pro-active, informed decision as to which strategy is most efficient for their retirement income. &nbsp; Deciding how to arrange your investment assets for retirement income is one of the [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"post_statement":"","post_description":"","post_cta":"","post_button":"Read More","post_button_url":"","compliance_id":"","post_disclaimer":"","footnotes":""},"categories":[7],"tags":[],"_links":{"self":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/posts\/47"}],"collection":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/comments?post=47"}],"version-history":[{"count":0,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/posts\/47\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/media?parent=47"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/categories?post=47"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/tags?post=47"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}