retirement center
Withdrawal Policy
Statement­—Example
Investor: James and Susan Reed
Advisor (if applicable): Michael Jones
Date of Agreement: January 1st, 2015
Withdrawal Policy Statement for James and Susan Reed
initial AMOUNT
$2 MILLION (JAN. 1, 2015)
Withdrawal Income Goals
Examples
}
This states the goals established when the retirement
income plan was created.
}
Generate monthly income to maintain current lifestyle.
}
Anticipate needing income to age 90.
}
Minimize changes to essential spending, but seeks to
maximize discretionary spending.
Initial Withdrawal Amount
Examples
}
This can be a total amount (frequency).
}
Target is $110,000 from retirement savings
}
It can also be broken down into various expense
categories such as essential and discretionary.
}
$70,000 for essential expenses ($5,833 monthly)
}
$40,000 for discretionary expenses ($3,333 monthly)
}
Listing an initial withdrawal percentage can also be
utilized here.
Policies Impacting Future Withdrawals
Examples
}
These are the guidelines or indicators that impact
changes to the withdrawal amounts.
}
Essential expense increases will be in line with the prior
year Consumer Price Index.
}
Discretionary income will be 6% of the identified assets’
ending value.
}
If confidence levels, as measured by Monte Carlo
simulation, fall below 65% for two consecutive quarters,
then withdrawals from discretionary spending will be
decreased in $5,000 increments not to fall below the
stated income floor.
}
If confidence levels exceed 90% for two consecutive
quarters, it will be determined what additional amount
of withdrawals are available.
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initial AMOUNT
Frequency of Review
$2 MILLION (JAN. 1, 2015)
Examples
}
Quarterly
Income Floor
Examples
}
This can be a total amount (frequency).
}
$70,000 Essential
}
It can also be broken down into various expense
categories such as essential and discretionary.
}
$30,000 Discretionary
}
Listing an initial withdrawal percentage can also be
utilized here.
Sources of Withdrawals
Examples
}
This describes where and how retirement income will be
generated from the indicated assets.
}
Cash, dividends and interest first to meet
essential spending.
}
(Ensure the parameters are specific enough to measure,
but flexible enough to meet unforeseen circumstances.)
}
Liquidate equities when performance exceeds target
allocations and reinvest in cash or fixed income for
current income or future withdrawals. Otherwise,
liquidate fixed income.
}
Discretionary spending will be paid in the same order
from identified assets.
Unexpected Expenses or One-time Needs
Examples
}
Additional income needs for unexpected expenses will
be taken from the emergency reserve funds established
by the client.
}
If additional income is needed from these accounts the
Policies Impacting Future Withdrawals will be followed.
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For Illustrative Purposes Only
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3009B-DC-1214 / DC-2030
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