Sustainable Retirement Income

Retirees need their money to last. Outliving retirement income is a fear of every retiree and an outcome every advisor should seekprevent.

Low Rates Means Low Income

Low bond yields (interest rates) mean low payments for retirees from these fixed income investments. As a result, many retirees have turned to other, often riskier, sources of income.

 

Systematic withdrawals, or taking regular withdrawals from an account, can complement other sources of income for retirees. The key is to avoid large losses while growing capital.

 

With a track record of limiting bear market impacts and consistent returns through market cycles, the Swan Defined Risk Strategy (DRS) may serve as a sustainable income vehicle, while providing growth of capital.

Let’s say you have accumulated $1,000,000 for retirement. You need $5,000 per month of income to complement your other sources of income, such as Social Security. The hypothetical below uses actual historical returns from three different investment choices and assumes your monthly withdrawal is adjusted annually 2% to keep pace with inflation.

The average person retires around 65 and lives about 20 years (average life expectancy of men and women).

You retire in December of 1997 and start taking annual withdrawals of $50,000 in January of 1998 to supplement Social Security.

After 20 years, how much would you have withdrawn and how much would you have left in the account?

DRS as a Systematic Withdrawal Plan

Source: Zephyr StyleADVISOR and Swan Global Investments. * Source: Zephyr StyleADVISOR and Swan global Investments. Hypothetical analysis above is using actual DRS results from the Select Composite, net of fees, not backtested performance numbers. Past performance is no guarantee of future results. See our Investing for Income presentation or visit www.swanglobalinvestments.com for more information.

Staying Power for Retirement Assets:

Remaining Invested, Withdrawing Funds, and Outpacing Inflation

The Swan Defined Risk Strategy (DRS) may provide staying power and growth for your assets in retirement, even while taking systematic withdrawals from your account.

 

Ask your financial advisor about how you could use the DRS to provide sustainable retirement income.