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Distribution

Distribution

Distribution is simply the period in which you begin to draw on your resources and retirement accounts. In the case of annuities, this would be the periodic payments you begin to receive upon triggering benefits. With regard to other instruments, it depends on how they are structured and how they will be used, but during distribution, individuals typically do not have income from work and are instead relying solely on their nest eggs.


The distribution phase may also share similar aspects of the preservation phase, for instance tax concerns. Consumers may also want to explore estate planning and wealth transfer strategies before and during distribution. In the case of an individual with many accounts and asset types, distribution will also involve structuring and sequencing plans to reduce tax liabilities and to maximize financial independence during retirement. In our staircase model, you’ve made it to the top.


You should be concerned with:

  • Time Horizon

When is best to initiate benefits? When is it possible to retire with maximum financial security? These questions may seem basic, but can be rather complex, given your ideal retirement and asset structures.

  • Payment Amounts and Frequency

Just as you would be need to know the amount of income you would receive from employment, you will need to know the benefit payment amount from your retirement plans and how often they will be paid to you.

  • Length of Retirement

With longer life expectancies and inflation, it is possible for you to outlive your money. Understand that retirement and wealth planning is constantly evolving. This is why a consultation with a financial advisor through all phases of retirement planning is critical; you can protect yourself from irrecoverable errors.