Retirees, Automate Your Spend-Down Plan

It’s one of the thorniest questions retirees face: How much can you safely spend each year? And once you’ve figured that out, which accounts should you tap first, how do you minimize taxes, and how do you keep your remaining portfolio in balance?

Early this year, Income Strategy will offer two new services, says William Meyer, managing principal. For retirees who want to manage their own money, the firm will offer not only access to the software but also specific trade recommendations to help draw down assets efficiently. The fee will be about $20 a month.

For retirees who want professional money management, Income Strategy will build a portfolio of exchange-traded funds and manage the whole drawdown process—sending cash to the client and rebalancing the portfolio. The annual fee for this service will be about 0.5% of assets under management, Meyer says.

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True Link, a robo adviser for retirees, launched late last year and helps implement a “bucket” strategy, with specific assets set aside for each year of retirement. Money you need this year might be held in money-market or high-interest checking accounts, while money you need five years from now can go into defined-maturity bond funds maturing in five years, says Kai Stinchcombe, chief executive officer of True Link. Underlying investments include ETFs and bond ladders, and the fee is 0.87% annually.

The site also offers a free tool that recommends a monthly withdrawal amount and asset-allocation plan based on a user’s age, gender and portfolio size.

United Income, which will become publicly available in mid 2017, aims to offer highly personalized drawdown plans. United Income will help retirees build portfolios of bond ladders, deferred annuities and other investments; tell them which accounts to tap first; and send them a regular retirement paycheck.

Instead of assuming spending will remain constant throughout retirement, the service will create a personalized spending forecast based on your gender, education level and other demographic information. Women, for example, “tend to look a lot more frugal relative to men,” says Matt Fellowes, United Income's chief executive officer and founder of financial-advice firm HelloWallet. United Income will also rely on demographic data, along with personal health information, to generate personalized life-span estimates. Fees are not yet disclosed.

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