The Retirement Toolbox: What You Actually Need in Distribution
Saving for retirement and living on retirement savings are two very different problems. The tools that served you well during your working years — maximizing contributions, chasing growth — don't automatically translate into a reliable income strategy.
Retirement distribution requires a different kind of toolbox. Here's how I think about it.
The foundation is guaranteed income. Social Security, a pension if you have one, and income annuities where appropriate — these exist to cover essential living expenses so that your survival isn't tied to the stock market on any given day.1 They manage longevity risk by pooling that risk across large groups of people. The guaranteed paycheck continues regardless of what markets are doing.
The growth engine is a diversified investment portfolio, but managed differently in retirement than during accumulation.2 Rather than a fixed withdrawal rule — the old "4 percent and done" approach — the portfolio needs dynamic guardrails: pre-set triggers that allow you to spend a bit more when conditions are favorable, and pull back slightly when they aren't. The goal isn't a rigid rule. It's a responsive system.
The shock absorbers are what most people overlook. Sequence of returns risk — the danger of a market crash in the early years of retirement — can permanently damage a portfolio even if markets recover.3 The solution isn't to predict crashes. It's to hold buffer assets outside your investment portfolio: the cash value of a whole life insurance policy, or a reverse mortgage line of credit. When markets drop, you draw from the buffer rather than selling depreciated assets. You give the portfolio time to recover.
The blueprint that ties it all together is your RISA® profile.4 A toolbox is only as useful as the person who knows which tools to pick up. Your RISA profile identifies which combination of these tools fits your psychological preferences — not just your financial situation.
No single product is a complete solution. But the right combination, built around how you actually prefer to live in retirement, is.
If you'd like to walk through what your toolbox looks like, let's schedule some time.
Click here to schedule your 15-minute Retirement Fit Call.
Let's make sure your retirement journey is as secure and fulfilling as you envision.
