Free Guide: How NextPhase Plans Retirement Income

WATCH · 2 MINUTES

Why the first years of retirement matter most.

Educational video about the order of investment returns in retirement. It is not a recommendation or a projection of any investment's results.

WHY IT'S DIFFERENT AFTER YOU RETIRE

Saving and spending are different jobs.

While you were saving, the order of good and bad years didn't change where you ended up. Once withdrawals begin, it does. Money leaves while values are down, and those dollars don't get the recovery.

That is timing risk, and it is one of three risks the guide walks through, along with inflation and living longer than planned.

Line chart, hypothetical: two retirees start with $500,000, withdraw $30,000 a year rising 3%, and earn the same 8.27% average return in opposite order. Jill, good years first, has $725,600 after 20 years. Joyce, bad years first, runs out in year 14. — Hypothetical illustration using S&P 500 index annual returns in opposite order. It shows how the order of returns affects withdrawals, not the performance of any investment or a projection of future results.

See the year-by-year numbers

Each retiree starts with $500,000 and withdraws $30,000 a year, rising 3% a year. Same returns, opposite order. Year-end values, rounded.
Year	Jill's return	Jill's value	Joyce's return	Joyce's value
1	+31.5%	$618K	-26.5%	$345K
2	+6.6%	$626K	-14.7%	$268K
3	-10.8%	$530K	+19.0%	$281K
4	+43.4%	$713K	+14.3%	$284K
5	+12.0%	$761K	+4.0%	$260K
6	+0.05%	$726K	-8.5%	$206K
7	+26.9%	$876K	+11.1%	$190K
8	-8.7%	$766K	+24.0%	$189K
9	+22.8%	$894K	-10.0%	$136K
10	+16.5%	$996K	+12.5%	$109K
11	+12.5%	$1.08M	+16.5%	$80K
12	-10.0%	$930K	+22.8%	$48K
13	+24.0%	$1.10M	-8.7%	$4K
14	+11.1%	$1.17M	+26.9%	$0
15	-8.5%	$1.03M	+0.05%	$0
16	+4.0%	$1.03M	+12.0%	$0
17	+14.3%	$1.12M	+43.4%	$0
18	+19.0%	$1.27M	-10.8%	$0
19	-14.7%	$1.04M	+6.6%	$0
20	-26.5%	$726K	+31.5%	$0

Annual returns are those of the S&P 500 index, an unmanaged index that cannot be invested in directly, with dividends reinvested and no taxes or fees. Past index performance does not guarantee or indicate future results. Data source: Standard & Poor's. The guide has the full tables, including withdrawals.

PUTTING IT TOGETHER

One plan, three risks.

Each part of your savings is arranged by when it will be needed, and each part is aimed at a different risk. The money you'll spend first is positioned most conservatively. The money you won't need for decades is positioned for growth.

Chart of invested assets by years in retirement. Five bands step down from left to right: fixed (annuities, CDs) for years 1 to 5 and income (bonds) for years 6 to 10, which seek to mitigate timing risk; income and growth (large-cap stock funds) for years 11 to 15, growth (small-cap stock funds) for years 16 to 20, and aggressive (international funds and alternative investments) for years 21 and beyond, which seek to mitigate inflation risk. An arrow for lifetime income from an annuity, starting in year 11, seeks to mitigate longevity risk. — For simplicity the chart groups the last two segments (years 21–25 and 26+) into one band; the six segments are shown below. Asset types shown are illustrative, not recommendations. Investing involves risk, including possible loss of principal. Annuity guarantees are subject to the claims-paying ability of the issuing insurance company.

Timing risk

The first ten years of income come from the more conservative bands, so early withdrawals are less dependent on a market downturn.

Inflation risk

Money for year 11 and beyond stays invested longer, with time to grow and fund rising income.

Longevity risk

An optional annuity can add lifetime income designed to help cover essential bills, however long retirement lasts.

THE IDEA IN ONE PICTURE

Six segments, each with one job.

Instead of one portfolio with one withdrawal rate, your savings are divided by when each dollar is needed. The first segment pays you now. The others stay invested and move toward stable assets as their income years approach. Select a segment to see its job.

Years 1 to 5: predictable income

Held in stable assets and designed to fund your first five years of monthly income, so the money you're living on doesn't depend on how markets do in those early years.

Above the segments sit a cash reserve for one-off needs and an optional income floor. Investing involves risk, including possible loss of principal. Asset allocation does not ensure a profit or protect against loss. There is no assurance a segment will reach its target.

WHAT'S INSIDE

A plan you can read in one sitting.

The three big risks
Timing, inflation and longevity, and why all three sit outside your control.
How the six segments work together
What each segment is for, and why changes happen at five-year boundaries, by design.
Income that steps up
Why the plan is designed to raise monthly income about 16% every five years, which is what 3% inflation compounds to.
What a written plan includes
The five parts of a NextPhase plan, the four factors that shape it, and a page of questions to bring to a first conversation.

WHO IT'S FOR

Written for savings that need to do just enough.

Close to the paycheck ending

You're within about ten years of retirement, or recently retired, and the next decisions feel bigger than the last ones.

Thinking in monthly income

The question on your mind is less "how much have I saved?" and more "what can I spend each month, for how long?"

Wanting it in writing

You'd like a plan you can read, question and share with your spouse, CPA or attorney before you act on it.

WHO'S BEHIND IT

Lifetime Retirement Partners

We're an independent retirement planning firm with offices in Omaha, Nebraska; Windsor, Colorado; and Sioux City, Iowa. NextPhase is the time-segmented income process we use to turn savings into a written monthly income plan.

The guide explains the method. It isn't a recommendation for your situation, which is what a written plan is for.

THE NEXT STEP

Your plan, in writing.

After a first conversation, your NextPhase plan arrives as a written Income Plan Analysis: a report you can read, question and share with your spouse, CPA or attorney. These are real pages from a sample plan for a fictional household.

The cover of a sample Income Plan Analysis: Lifetime Retirement Partners and NextPhase, Retirement Made Clear, prepared for Example and Mrs. Sample.

Plan overview page explaining the three risks and how savings are placed into time segments, with a diagram of segments funding income over time.

Income Plan Summary page with plan start, length, investment assets, income goal and obligations, shown as summary figures and donut charts.

Implementation Plan Summary page showing how each account is allocated across segments.

Income Detail page with a stacked bar chart of projected household income by source for each year of the plan.

Social Security Detail page with claiming ages, cost-of-living assumptions and a bar chart of projected benefits.

Sample pages from a hypothetical plan for a fictional household. Your report reflects your own information and assumptions. Projections are hypothetical, are not guaranteed, and actual results will vary.

See how your savings could be organized for income.

Start with the guide. When you're ready, a written plan shows your own numbers.

Get the free guide Prefer to talk? Call 800.971.2989.