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Drawdown Strategy Variation Based on Retirement Status


Exploring Fund Depletion Order in Accordance with Retirement Status Input

Question: If one 's input is "not retired", does the Income Summary/ Gross Income Breakdown algorithm automatically stipulate that non-registered funds are to be exclusively depleted, before registered funds are used and depleted in full, followed by TFSA funds? That is the result I get when inputting "a retirement date of 2022; however if I input "Already Retired" I get a layering approach. 


Answer: In all, cases the Milestones Retirement Insights software will select the drawdown strategy that maximizes the net estate value at your expected mortality when it models taking the same list of annual disposable (inflation-adjusted) incomes in each year under each strategy. The software does not take withdrawals out of your investment accounts to generate income prior to retirement (there is a possible exception to this rule for semi-retirement – one spouse working while one is already retired). Delaying retirement by 2 years reduces the duration of time for which the retirement income stream must be generated from the investment accounts which can affect the amount taken for retirement income and/or the estate value at expected mortality which can then affect the optimal strategy for drawdown.

Keywords: Retirement Strategy, Drawdown Strategy, Investment Accounts


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