Growing Guaranteed Income Allows For A Maximum Stock Market Withdrawal Strategy

(don’t forget to checkout the video of this blog too)

One of the most important elements of financial planning is ensuring you have enough money to last all the way through retirement.

This is the biggest concern for most people approaching retirement but it’s also a very difficult problem to solve with 100% certainty…

That’s because nobody knows exactly how long they need their money to last (in other words: nobody knows how long they’re going to live)!

That’s why it’s so important to build a Retirement Income Plan that includes sources of guaranteed, lifetime income.

This addresses what’s called “longevity risk”.

Having sources of guaranteed income protects you from longevity risk very effectively, ensuring you will never run out of money in retirement…

But, it also gives you some flexibility that you may not realize (more on this in just a moment).

So when I speak of guaranteed income it might include some type of annuity, and it might not.

You may have plenty of income with a company pension, social security (and even sources of real estate income can be included, although they’re not technically guaranteed).

It’s even better if you can time these sources of income to be maximized in the year that you want the income…

That means allowing them to grow independent of the volatility of the market.

Doing this requires some foresight in repositioning some of your retirement money out of the market as you approach retirement (which is often a good idea anyways because of what’s called the sequence-of-return risk).

Having these deferred sources of guaranteed income growing gives you the flexibility to “turn on” or activate this income whenever you are ready.

Having these GROWING sources of fixed income gives you a lot of flexibility with your other retirement assets.

Let me explain:

If you know you have a source of guaranteed income that is growing at 8–9% per year (maybe more)…

Then you have the flexibility to take much higher withdrawals from the market without sacrificing the long-term safety of your retirement plan.

If you have sources of income that you can activate whenever you want, you have the freedom to spend much more aggressively (meaning higher withdrawals than The 4% Rule allows for).

You can use guaranteed income sources for the bulk of retirement income and use performance-based withdrawals from the market for supplemental income (this is one of my favorite approaches to Retirement Income Planning).

That way if the market does REALLY well you can take some (or all) of the gains that year, spend them how you want, and still preserve the principal of your investment portfolio.

If the market drops, you simply activate, or rely on your fixed income sources while you patiently allow the market to recover..

That way you’re never taking money out of the market when it’s down.

This type of plan gives you the ultimate control over your income in retirement, plus gives the security of knowing that you will never run out of money in retirement.

Let’s chat 💬😎