The Buckets of Money® Retirement Solution: The Ultimate Guide to Income for Life

Chapter 10. Craft a Workable Withdrawal Strategy

I read somewhere that 90 percent of mountain-climbing accidents happen on the way down the peak. That may be an apt metaphor. Amassing retirement savings is, for many of us, a long, hard, uphill slog. But if you make a mistake on the uphill grind, you've still got job income coming in regularly and perhaps time to recover. However, run into a problem as you descend life's slope—say, a market that drops 50 percent in a year—and you could end up a financial fatality if you're not well-bucketized.

With the demise of traditional pensions, not to mention paltry savings levels and ever-expanding life spans, many Americans run the risk of seeing their money disappear before the end of their retirement. In fact, according to a 2008 study by Ernst & Young, nearly three out of five middle-class retirees will likely run out of money if they maintain their preretirement lifestyles and don't reduce spending by at least 24 percent.

Of course, reducing spending is not the only factor in the equation. Other variables include when you choose to retire, how much of your income you annuitize, at what age you elect to collect Social Security, what you do with your home, the way you allocate your assets (i.e., your Buckets of Money plan), the taxes you pay, and what strategy you have for withdrawing the money you need. In this chapter we'll look at ways that you might draw down your money without scrambling your nest egg.

Too few people know—or think much ...