Decumulation Planning

Figuring out how much money you need for retirement can feel daunting. Here, past podcast guest David Blanchett explores a study conducted by The Alliance for Lifetime Income, which reveals changing attitudes and behaviors toward retirement security.

If you’re like many successful investors or the “millionaire next door”, you’re hardwired to save instead of spend. Reframing your mindset won’t be automatic, but learning to embrace spending your money on what matters most to you is priceless.

he manner in which you spend throughout retirement isn’t static, nor is it always consistent with inflation. As past podcast guest, David Blanchett, has found, it’s much more complex than that.

The transition from accumulation to decumulation mode can be one of the biggest challenges for retirees. In addition to requiring a mindset shift, it also presents unique obstacles that should be considered as part of your retirement planning process.

Despite the effects inflation and volatility can have on retiree income, new research through Morningstar suggests a “safe starting point” withdrawal rate for new retirees in 2023 is 3.8 percent, up from 3.3 percent a year ago.

Between the depletion of pensions, surging inflation and extended longevity, it might feel more complicated than ever before to know how to responsibly spend your savings, not to mention extend your income to potential decades down the road.

The decumulation phase of retirement can be one of the most challenging chapters to navigate. After decades of working, saving and accumulating, it can feel foreign to finally allow yourself to enjoy the fruits of your labor.

For many, the concept of retirement accumulation and retirement decumulation might feel hemispheres apart.