Weekend Reading: How to Plan Retirement Income for a Constrained Investor

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
Weekend reading retirement income constrained investor Weekend reading retirement income constrained investor
Weekend Reading

Much like any other aspect of retirement planning, there is no universal model or industry standard when it comes to crafting your lifelong income stream. It simply comes down to strategies based on your unique financial situation. For “constrained investors” in particular, this means any risk needs to be carefully managed so as not to ruin retirement security.


A blending of strategies: To determine if you are a constrained investor, you would calculate the ratio of your minimum annual living expenses to the value of your net investment assets. If the outcome is more than three percent, you could be classified in the constrained category. In that light, reducing risk to retirement income would be top priority, and one of the main ways to do so is by blending “bucketing” and “flooring” strategies from an annuity.

A breakdown: This seven-segment hybrid strategy not only builds protection from inflation, but timing and longevity risks as well. As shown here with a case study included, the plan itself features three components, all of which are aimed at balancing protection and risk for a streamlined monthly income:

📌 Five, five-year segments to produce income over a 25-year span

📌 A sixth segment of aggressively-invested, liquid, 25-year-hold capital appreciation account meant to provide old-age income, serve as a legacy or assist with long-term care expenses

📌 An annuity-funded seventh segment meant to assist in providing lifetime income

My two cents: Your income strategy doesn’t need to be nearly this complex; however, you do need a strategy and a variation of what is described in this article. It may be just what the doctor ordered.