People often assume that managing money for income is simply a matter of selling investments as needed from a diversified portfolio and then periodically rebalancing assets to maintain a target allocation.  But there are hidden dangers in this strategy (or lack of strategy) that are not obvious.  An investor, who is forced to sell investments for income during a down market, can quickly devastate a portfolio to the point where it is no longer possible to recover---even after the market does.  This approach is called Systematic Withdrawals, and it is usually accompanied by a statistical technique called Monte Carlo Analysis that is used to determine a safe withdrawal rate---recognizing that the definition of "safe" usually still assumes a 5-10% chance of running out of money too soon.

Systematically selling investments as needed for income is the easy, automatic, and seemingly natural approach, but it's not really a strategy.  It's just the default situation that exists when no deliberate strategy has been employed.  What today's retirees and the many baby boomers on the verge of retirement really need is a highly strategic way to maintain steady and dependable income while investing in financial markets that can be anything but steady and dependable.

The solution to this paradoxical challenge is Defined Withdrawals.  Defined Withdrawals is a simple but powerful strategy that reduces risk and provides greater peace-of-mind to both retirees and their advisors.  The foundation is an Income Ladder of fixed-rate investments that creates essentially guaranteed income for a predetermined number of years.  The income ladder replaces salary and provides security while the remainder of the portfolio is invested in stocks for long-term growth.  Eventually stocks are sold to Extend the Income Ladder.  But the income ladder gives the investor some time and flexibility to hold out for favorable stock selling opportunities when necessary.  Download our free book, Mastering the Journey with the Retirement Income Navigator, for a more complete explanation.

How much difference can strategy make?  Find out with our free Practice Navigator calculator.  This unique calculator simulates real-life market variability and lets you do a head-to-head comparison of Defined Withdrawals vs. Systematic Withdrawals.  After a little practice you will be amazed at how much better you can do with a Defined Withdrawals strategy.  Before using Practice Navigator, we recommend viewing the free Nightmare on Wall Street presentation.

The Defined Withdrawals strategy itself is not complicated, but real-life income plans and personal financial situations can be.  A powerful tool is needed to develop and optimize a comprehensive Defined Withdrawals plan.  That tool is the Retirement Income Navigator software, which we offer in cooperation with Brentmark Software, a leading provider of financial planning tools.  Click the Products link at the top of the page to learn more.  

We are often asked whether the Retirement Income Navigator software is designed exclusively for professional planners or whether individual planners can also use it.  It is a professional product, but many individuals will have no trouble following the examples in our Free Book and using the software to develop their own plans.

Finally you may also want to check out the free online calculator at IncomeLadders.com.  Just enter your desired income and the available bank CD rates.  The calculator will then build your ladder and calculate the cost.