Compound Growth in Retirement
Keep growth working in retirement while managing risk with buffers, allocation, and rules-based rebalancing.
Compounding Doesn’t Stop at Retirement
Even after you start withdrawals, a portion of your portfolio may stay invested for decades. Keep growth assets working while controlling risk with your allocation and rebalancing bands.
Sequence-of-Returns Matters
Early negative returns can hurt a new retiree. Hold a cash or bond buffer for 1–2 years of spending so you aren’t forced to sell equities at lows.
Model Different Paths
Use a range of return assumptions, not a single number. Test conservative, base, and optimistic scenarios and adjust withdrawals as needed.
Illustration: Spending Buffer
| Bucket | Purpose | Typical Size |
|---|---|---|
| Cash/Bonds | 1–2 years withdrawals | Short-term stability |
| Core Equities | Long-term growth | Broad index exposure |
| Optional Tilts | Small value/momentum | Modest allocations |
FAQs
- What’s a safe withdrawal rate?
- No single number fits all. Many planners test 3–5% and adjust for markets and personal needs.
- How often should I rebalance?
- Annually or when your allocation drifts by 5–10 percentage points. Use rules to avoid emotional moves.