The majority of your life is spent in accumulation mode — earning a steady income and putting money aside for things like retirement, savings, your child’s education or a dream vacation home. After years of investing and saving, it is critical to shift your mindset out of accumulation mode and into distribution, or decumulation, mode when retirement nears. Making that mental shift is difficult for most, but having a comprehensive wealth plan that includes a retirement income distribution strategy can help.

Doing Your Retirement Income Planning in the Right Order Matters

A wealth plan ensures you won’t run out of money in retirement by preparing for your cash-flow needs, increased inflation, taxes and expenses such as health care costs, which greatly increases your probability of success in retirement. Having a retirement account is simply not enough. Without a distribution strategy, you are missing one of the most critical components of your retirement plan.

Moving Away From Accumulation
Many people save for retirement in a 401(k) or Roth IRA, but having a savings plan isn’t the same thing as having a wealth plan for how those funds will actually be used in retirement. Those who hoped to retire in 2000, 2008 and 2020 learned the hard way just how important it is to shift your mindset away from accumulation as retirement approaches. During those types of economic downturns, many investors were likely focused on accumulation, with most of their assets in mid- to high-risk equities. If retirement was right around the corner, most probably didn’t have enough time to recover from the major blow to their accounts before drawing funds for retirement.

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