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The Retirement Distribution Challenge

We start our careers with a huge amount of human capital, or the value of our future lifetime earnings from work. Over the course of our working years, our human capital is converted into income to cover both current expenses and to provide a source of savings to fund future goals.

The challenge is deciding how to position those savings between different financial tools and products to support our future spending goals and manage the risks confronting those goals.


The strategies that worked for your savings during your working years may not be best for your retirement years. Think of it like climbing a mountain – the goal is not to just make it to the top; it is also to get back down safely. The skillset and tools required to get down the mountain may not be the same as those needed to reach the summit.

The objective of a retirement saver is not just to make it to the top of the mountain by achieving a wealth accumulation target, but to make it down the mountain safely by spending assets in a sustainable manner.

Applying a Framework

The Retirement Income Optimization Framework (RIO™ Framework) identifies the process of mapping assets to retirement liabilities. Assets are divided between reliable income sources, the diversified portfolio, and reserves.


Goals are aligned with specific funding sources based on your preferences and priorities.

The primary financial goal for most retirees relates to their annual spending: maximize spending power (lifestyle) in such a way that spending can remain consistent and sustainable without any drastic reductions, no matter how long retirement lasts (longevity).

Other important goals may include leaving assets for subsequent generations (legacy) and maintaining sufficient reserves for unexpected contingencies that have not been earmarked for other purposes (liquidity).


RIO™ Framework
Putting it all together

Instead of placing equal weight on all goals, the Retirement Income Optimization (RIO™) Framework is designed so that assets are used efficiently to meet goals and cover liabilities. This goes beyond only looking at your investment portfolio and its asset allocation. Proper planning may require layering of other income sources to provide alternative funding.


Reliable Income
How can I create a base of secure income in retirement that is safeguarded from market volatility?

Reliable income assets are used to draw consistent income to meet longevity goals by covering essential expenses. The idea is to build a floor of low-risk, contractually-protected income sources to serve basic spending needs in retirement.


How prepared are you to support liquidity for contingencies in retirement?

Reserves are assets that are not already earmarked for other purposes to provide cash flow to fund unexpected spending needs in retirement and limit the impact of spending shocks.


Diversified Portfolio
Do you have a unified strategy that emphasizes your retirement preferences and is coordinated with your reliable income and reserves?

The diversified portfolio can be used most effectively to meet lifestyle and legacy goals. With the flooring in place for essential expenses, retirees can focus on upside growth potential with these assets.

No one solution works for everyone.

Your needs are unique, and your plan should be too.


Take the next step
towards retirement clarity.

The security and reliability of income derived from insurance policies and annuity contracts vary by terms and issuers. McLean Asset Management Corp. is not an insurance agency or insurance company. Insurance sales are conducted by licensed insurance agents in their separate and individual capacities, including through McLean Insurance Solutions, an affiliated insurance agency. Blog posts linked on this page are intended for convenience, educational, and informational purposes only. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. The adviser does not endeavor to update or remove blog posts and articles after initial publication. No linked content should be construed as individualized advice or recommendations, and the discussions contained are not a substitute for investment advice from a professional adviser. This commentary should not be regarded as a complete analysis of the subjects discussed. Not all services will be appropriate or necessary for all clients, and the potential value and benefit of the adviser’s services will vary based on a variety of factors, such as the client’s investment, tax, financial circumstances, and overall objectives. The effectiveness and potential success of a retirement plan depend on a variety of factors, including but not limited to the manner and timing of implementation, the client’s retirement horizon and investable assets, and overall market conditions. Neither personalized nor tailored services should be construed as a guarantee of a particular outcome. Past performance does not guarantee future results. All investing comes with risk, including the risk of loss.