Isgplanning.com
Title
Managing Money During Retirement with Defined Withdrawals
Description
Most people assume that managing money for income is simply a matter of selling investments as needed from a diversified portfolio. However this is a dangerous strategy (or lack of strategy) that can produce highly unpredictable results. The degree of risk is not intuitively obvious. It is tempting to assume that the good years will simply offset the bad. But there is more to it than meets the eye. A retiree who is forced to sell investments during a down market can quickly devastate a portfolio to the point where it is no longer possible to catch up---even after the market does.
The underlying problem stems from having to sell investment for income during down markets. Strategies and software tools that acknowledge this risk tend to focus on identifying the withdrawal rate that can withstand either worst-case hypothetical or worst-case historical scenarios. But this approach fails to address the underlying problem, and retirees are often forced to live on less income, leave less to heirs, or live with less certainty than might otherwise be possible.
The Defined Withdrawals strategy combines Income Ladders with Flexible Stock Holding Periods to minimize the risk of having to sell stocks during down markets. The fixed-rate investments that make up the income ladder provide essentially guaranteed income for a pre-determined number of years. This makes it possible to hold stocks for the long-term when necessary. Over time stocks are sold to extend the income ladder. But if the market crashes the day after the plan is executed, the investor isn't forced to sell stocks at bargain-basement prices. He or she can take comfort in knowing that near-term income is secure while waiting for a more favorable selling opportunity.
Contact
- Katzenmaier, Roger
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- ROSEVILLE MN
- US 55113-5417
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- (612) 646-5185
