Strategies you need to know for drawing an income in retirement years
It is probable that many of us will live longer than our parents. From an investment point of view this poses a challenge, as the number of years spent working and accumulating capital may be fewer than the number of years spent in retirement drawing an income from that capital. There are many strategies for drawing an income in retirement. The more conventional ones include the portfolio return, time to maturity (bucket) and flooring strategies. The portfolio return strategy regularly draws down a percentage of the portfolio (a safe rate is 4% to 5%). The strategy invests in a diversified portfolio of cash, bonds, property and equities that are rebalanced periodically to achieve a targeted rate of return. The focus is on the entire portfolio and the investor draws from the entire portfolio over time. Rebalancing of cash, bonds, property and equities is implemented at asset manager level. For example, should equities have outperformed, the manager may decide to reduce equity exposur...
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