Laura Stover, RFC® discusses the concept of time segmentation and its application in allocating retirement savings for a stable income during retirement. Time segmentation involves matching investments with the point in time when they will be needed to meet retirement income needs. This strategy provides clarity, comfort, and control over retirement income and helps mitigate the effects of market volatility.
We cover the four buckets of money in a time segmented approach and emphasize the importance of purpose-based allocation. The benefits of time segmentation include flexibility, optionality, and reduced risk capacity.
It’s important to work with an income specialist to determine the best strategy for individual retirement goals. Key takeaways include the significance of purpose-based allocation, the four buckets of money in a time segmented approach, the potential benefits of time segmentation in reducing the impact of market volatility, and providing flexibility and optionality to long-term growth buckets.
Time segmentation is a strategy to invest for retirement and emphasizes its role in aligning investments with the point in time when withdrawals are needed to meet retirement income needs.
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Timestamps (show notes):
0:01:54 Time segmentation is a strategy to match investments with retirement income needs
0:05:14 Bond laddering can be part of the time segmentation strategy
0:06:31 Duration risk and default risk can be eliminated with time segmentation
0:07:44 Time segmentation provides flexibility and optionality for long-term growth
0:08:47 Allocation of assets for different purposes and spending shocks
0:10:19 Time segmentation helps with comfort, control, and certainty in retirement
0:11:49 Explanation of the four-bucket time segmentation approach
0:13:35 Purpose of each bucket in the time segmentation strategy
0:14:16 Visualizing money in phases for risk and purpose understanding
0:14:49 Importance of purpose-based allocation and risk capacity reduction
0:15:39 Utilizing various investment vehicles and tools for each bucket
0:16:35 Importance of having a plan and confidence in making decisions
0:17:08 Utilizing bonds, annuities, CDs, and other vehicles for conservative buckets
0:18:20 Guaranteeing retirement income and managing risk with predictability
0:19:13 Segregating bonds for income guarantee and risk identification
0:20:05 Exploring the concept of the bond tent and different strategies
0:23:25 Managing investment exposure and stress testing risk
0:26:36 Customizing income plan and purpose-based allocation for specific needs
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