My Favorite Retirement Income Strategy



Hey Reader,

Whether you call it retirement, work optional, financial independence or some other term, you should be excited to have the freedom to do:

  • What you want
  • When you want
  • Where you want

But withdrawing from the savings you worked so hard to accumulate can be one of the scariest transitions you make.

Today, I’ll share the strategy I use to help clients enjoy their retirement without worrying about running out of money.

Retirement Income Guardrails

Think of guardrails like bumpers at a bowling alley.

When your ball slips and goes off course, the bumpers redirect it and keep it out of the gutter.

Guardrails are similar.

When you bump into a guardrail, it adjusts your portfolio withdrawals to keep you on the right path.

These adjustments allow you to maintain your standard of living while preserving your portfolio across decades of retirement.

How Guardrails Work

The guardrails strategy uses parameters that signal when to:

  • Cut withdrawals in bad times
  • Give yourself a raise in good times
  • Increase withdrawals with inflation
  • Freeze at your current withdrawal rate

Research found that using guardrails with a 65% stock, 35% bond, and 10% cash portfolio over a 40-year period resulted in:

  • A 5.3% starting withdrawal rate
  • 2 withdrawal decreases
  • 7 withdrawal increases
  • 6 withdrawal freezes

In 14,000 simulations, these circumstances led to a 100% success rate where the portfolio had at least $1 at the end of the 40-year period.

Even better, the retiree maintained 100% of their purchasing power against inflation.

You can read the entire guardrails research paper HERE.

Guardrails in Practice

The guardrails research provides a great framework, but academic theory can rarely be applied to real life as seamlessly as research papers suggest.

Between Social Security claiming strategies, unexpected expenses, life expectancy, and the hundreds of other variables involved with retirement, you need a strategy tailored to you and your changing circumstances.

​That's why I perform a detailed cash flow and savings analysis at the start of every ongoing and one-time financial plan.​

Then, we annually update the plan to account for progress, investment performance, and life's changes.

Conclusion

You can read about dozens of strategies for accumulating and withdrawing your retirement assets.

What matters is executing the right strategy at the right time in the right situation.

That's the purpose of your financial plan. So, let's get yours in place.​

-Matt Garasic


PS - If you...

  • Want practical advice on how to reach your financial goals
  • Don't have time to properly manage your financial situation
  • Need help navigating the financial ramifications of a significant life event

That's what we do.

Still have questions? We have answers

Disclaimer:

This is for general educational and illustration purposes only. This should not be taken as individual investment, tax, or legal advice.

Consult your legal, tax, and financial team before implementing any financial strategies for your specific circumstances.

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