Retirement Income Planning
Planning how accumulated assets can sustainably support future retirement spending.
Turning a portfolio into an income
Accumulating capital and drawing an income from it are two different problems. The second one is harder, because the sequence of returns starts to matter in a way it never did while you were still contributing.
Retirement income planning addresses how much can reasonably be withdrawn each year, which assets should be drawn down first, and how the allocation should shift as you approach and enter retirement.
The aim is a level of income you can sustain without being forced to sell growth assets at the worst possible moment.
What the plan works through
Sustainable withdrawal level
How much can be drawn annually with a reasonable probability of the capital lasting. This is a range shaped by your horizon and allocation, not a single fixed number.
Drawdown sequencing
Which assets to draw first. Holding a buffer of safe assets means you are not forced to sell equities during a downturn to fund living costs.
Shifting the allocation
As retirement approaches, the balance typically moves further towards safe assets, and speculative exposure such as bitcoin is reduced or removed entirely.
Sequence-of-returns risk
A poor few years early in retirement does disproportionate damage. Planning for that possibility in advance is more effective than reacting to it.
Planning details
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