Finance Hear Now, Pay Later CSA Members Save 10% CALL TODAY 877-685-5327 *Paymentamount calculatedafterallapplicablegovernmentgrantsanddiscounts. **Notvalidwithanyotheroffer,discountor thirdpartyorders. Fulldetailsavailable in clinic. ** For as little as$53 a month, you will benefit from the newest hearing aid technology and start enjoying life to the fullest today! * www.helixhca.com asset categories (stocks, bonds, cash), mutual funds, ETFs and other assets as well. The great advantage of this strategy is that it aligns well with the investment approach which most professionals recommend: buy low and sell high. The disadvantage is that it’s not a “set it and forget it” strategy. You’ll have to keep an eye on your portfolio regularly, and understand what’s working and what’s not. 6. Floor and ceiling strategy With this strategy, you set a base withdrawal rate, along with a “band” within which that rate can fluctuate. Depending on how your portfolio performs in any given year, you adjust your actual withdrawal up or down from the base rate. Let’s say you determine that a base 5%withdrawal rate fits with your financial goals. If your portfolio does well in the year, your withdrawal increases the following year, up to your predetermined “ceiling,” which might be 1% or 2% higher than the base rate. If the portfolio performs poorly, your withdrawal rate decreases the following year, down to a defined “floor,” which might be 1% or 2% lower than your base rate. The goal is to give yourself the ability to enjoy some of the fruits of your portfolio’s success after a good year, while giving you the opportunity to reinvest any returns in excess of that amount. Conversely, you can give your portfolio a chance to recover after a lean year, while still maintaining a reasonable withdrawal level. The great advantage of this strategy is that it more accurately accounts for the kind of change which happens in the real world. As much as we may try to limit it, market volatility remains a fact of life. With this strategy, you have the flexibility to respond to market events (at least to some degree), while still keeping your portfolio safe for the long term. That makes for greater peace of mind. The disadvantage is that its success depends largely on establishing an appropriate withdrawal range from the get-go – that’s not always easy to determine, particularly for those without advanced financial-planning knowledge. In addition, the strategy requires a good deal of discipline; if you can’t stick to your determined floor and ceiling limits, there’s no point to the strategy. Which strategy is right for you? When it comes to withdrawals, it’s important to remember that there is no one “right” or “wrong” way to take money out of your retirement portfolio. The simple fact is, any one of the above strategies can work – you just have to figure out which one “fits” with your lifestyle and your personality. How do you do that? Ask yourself the following questions: ▶▶ How important is it to keep things simple? ▶▶ How do you feel about market volatility? Is it something that you can handle? Or does it keep you up at night? ▶▶ Which is more important: maintaining your current lifestyle or maintaining your current net worth? ▶▶ Are you anxious about outliving your assets? ▶▶ How much flexibility do you have to reduce annual spending? Your answers to these questions will help to steer you naturally toward certain strategies and away from others. But if you’re still unclear, it’s a good idea to consult with a qualified financial professional. With so much riding on the way in which you withdrawmoney from your retirement fund, you’ll want tomake sure that you get it right, from the first day of retirement to the last. CSANews | SPRING 2016 | 27
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