As you near retirement, you’ve likely accumulated a nest egg through life-long contributions to retirement plans such as a 401(k) or 40(3). Now comes the hard part – repositioning that nest egg into a successful distribution strategy that works to counter risks such as outliving your money, rising inflation or a negative sequence of returns.

“We spend our entire lives planning for that one day, first day of retirement. I think there’s just too much to lose, too much to risk to not have professional involvement and not to implement a plan that’s written and that has been back-tested,” says my colleague Andrew Large at Advisor Group. That written plan, NextPhase, is a bucket strategy that segments your money into generally 5-year segments. As Andrew says NextPhase “takes out the magnifying glass and puts it on retirement income.” Each bucket has a different risk and expected rate of return and each one is dedicated to take income at a different time. Earlier buckets take on little risk, while later buckets take on more risk. According to Andrew, “Really the low risk assets are minimizing sequence of returns risk; the risky assets are helping us account for inflation, those are going to grow over a long period of time.”

So, as you near retirement, it’s important to start thinking about your retirement account as multiple buckets of money that may need to be separated into different investments to achieve a successful retirement outcome. We use NextPhase to calculate how much annual income your assets can generate over your lifetime, then explore, with you, how to reposition your investments for retirement income distribution. Want to learn more? Just let us know.