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Improve your wealth IQ in just minutes by reading through key questions and answers related to wealth management.

Wealth accumulation is like climbing to the top of Mt. Everest.  Creating a predictable, sustainable, lifetime retirement income is analogous to safely getting back down to the bottom.  You don’t want to run out of supplies half way back down or run out of money during your lifetime and at SPM we take great care to help you make the very best decisions regarding your wealth utilization phase of your life.  We start by challenging you to answer reflective questions such as the ones below:

  1. How much will I need in retirement to meet my desired lifestyle?
  2. Where should I invest now?
  3. How much will inflation affect my retirement income and lifestyle throughout my life?
  4. What’s the best way to take money out of my retirement accounts?
  5. What’s my best asset mix going forward?
  6. What is the best way to balance the growth, safety, liquidity, taxes, cost, diversification and income requirements of my retirement portfolio?
  7. What income withdrawal rate and techniques will help me not outlive my money?
  8. How will I pay for health-care expenses?
  9. Is a Long Term Care stand alone insurance policy the best way to address a potential LTC need or is a Life insurance & LTC combined policy the better way to go?

The retirement landscape has changed and your SPM Wealth Advisor will help you better understand how the resulting changes can impact your future and your current financial decisions.

  • Longer life expectancies, future inflation rates and retirement spending habits must be accounted for in distribution plan modeling.
  • While historic average returns may be a valuable starting point for modeling in the accumulation phase, distribution modeling is complicated by cash outflows.
  • The central concern in the distribution phase is shortfall risk, or outliving one’s assets, so investors and advisers must develop a sound distribution strategy.
  • The new math of the distribution phase emphasizes the importance of downside risk management and the sequence of investment returns — particularly in the initial years of withdrawals.
  • Standard deviations and calendar-year returns are incomplete measures of downside protection.
  • Both qualitative and quantitative analysis is needed in order to gain insight into the character of an investment manager.
  • True risk controls are a byproduct of company philosophy and process.

Creating sustainable retirement income portfolios is both an art and a science. Multiple uncertainties and assumptions complicate the task, as individual investors must balance portfolio stability and growth in order to meet future liabilities. Furthermore, portfolio withdrawals amplify the impact of market declines in the distribution phase. The shift from the accumulation to the distribution phase of investing requires new thinking about risk and risk metrics.

Protecting and extending an investor’s capital base must go beyond careful modeling to include a thorough search for an investment manager with an excellent record of risk control. Analysis of downside protection and results over meaningful periods, coupled with a detailed qualitative evaluation, can yield revealing patterns about the character of an investment manager.

To continue reading "The 'New Math' of Retirement Income Distribution" and better understand how the retirement landscape has changed, visit the "Wealth Utilization" section in our Resource Library.  


The information presented is intended for informational use only and is not a substitute for investment, legal, tax, or insurance advice. State, national and international laws vary, as do individual circumstances; so always consult a qualified investment advisor, attorney, CPA, or insurance agent on all investment, legal, tax, or insurance matters. The effectiveness of any of the strategies described will depend on your individual situation and on a number of other factors (e.g. time horizon, risk tolerance, etc.)