Sequence of Returns

Nowhere is the sequence of returns more important than when investing for retirement income. By its very nature the need for consistent income demands stringent parameters be applied to the design and make-up of this portfolio type.

Drawing a fixed income stream from a portfolio that is experiencing a capital drawdown due to investment losses is akin to throwing gas on a fire. As income is withdrawn from the decreasing capital pool the percentage the income withdrawal accounts for increases. This can be catastrophic as the portfolio can quickly pass the point of critical-mass where it can no longer support the income withdrawal stream.  Shortly after this point the client simply runs out of money.

Managing with a goal of consistent returns, with minimal capital drawdowns, is paramount when investing for retirement income. 

*No stategy ensures a profit or protects against a loss. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values and yields will decline as interest rates rise and bonds are subject to availability and change in price.