Guardrails to Safeguard Retirement Income - Calculating Sustainable Withdrawal Rates

How to Use Guardrails to Safeguard Retirement Income.
This video gives a short overview of how we use "guardrails" to manage a sustainable withdrawal strategy for a retiree. We give a longer, more detailed look at the strategy in our webinar here: • Managing Your Retireme...
Many retirees who don't want to purchase an annuity with their investments still want a stable lifetime income coming out of their retirement accounts. A guardrail strategy is an effective way to manage your retirement income each year while reacting to the ups-and-downs of the market.
Here's how it works:
First, we establish your spending goals for things like living expenses, vacations, car purchases and home projects. Suppose that amount is $100,000/year.
Second, we check this spending against your investment savings using a technique called Monte Carlo analysis, to make sure the amount is not too high for the entirety of your retirement.
Remember, we want to make sure you can use your savings for retirement goals, but not run out of money. You'll want to have a successful enough plan to start this process, something like 85%-95% likely to meet all your spending needs.
Finally, we check that amount of spending and savings each year to see whether you can take a raise, stay the same on your income, or need to cut back. This is effected by the market, and in most years, you shouldn't have any adjustment.
That means you're within the guardrails.
* If you need to make an adjustment up or down, we can determine a good estimate for how much that adjustment needs to be. It does not need to be a 10% decrease in spending if you see a 10% reduction in your portfolio.
Consider reaching out if you have more questions about how to structure retirement income without using annuities in your investment portfolio.
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