Monitoring Your Progress: Withdrawals
Reflect
In the previous lesson, we went over the three key parts to the portfolio monitoring process. Each week, we will be focusing on a different element to ensure you have a cyclical process you can use time and time again throughout your investment journey.
- Monitoring your allocation
- Monitoring the progress toward your goals
- Monitoring your personal situation for any changes in your life or family status
In this lesson, we will be going over how to effectively monitor your progress in regards to withdrawals. You can use the Monitoring Your Progress Worksheet to monitor your withdrawals, so you'll want to make sure to download to complete this lesson.
If your portfolio is significantly larger than the worksheet suggests, you may be able to take out larger withdrawals. However, if your portfolio is smaller than the worksheet says it should be, you may want to consider reducing the size of your withdrawals if at all possible.
Some investors find setting a minimum and maximum ranges for taking withdrawals (aka, a floor and ceiling approach) helpful to ensure they don't outlive their money.
Retirees can also rely on their required minimum distributions, also known as RMDs, which can help guarantee you won't outlive your money but can result in significant changes in the size of each year's withdrawals.
If you're wondering, "So, how often should I monitor my progress towards my goals, regarding savings as well as withdrawals?" Well, as we discussed in the previous lesson, the answer will be different for each person; however, we have a few suggestions:
- Generally, comparing your actual portfolio balance against the worksheet once per year should be sufficient
- If there has been a significant change in your finances, you may wish to check more frequently
Participate
Monitoring your progress in relation to withdrawals and developing a clear plan will help set you up for success. Now, it's time to use the Monitoring Your Progress worksheet which will show you whether you are on track to reach your goals relative to these assumptions.
For this lesson, we encourage our members to download the Monitoring Your Progress worksheet, as well as answer the two discussion questions below.
- Have you set minimum and maximum ranges for taking withdrawals? If so, please share what your current plan is right now.
- What is your current plan to monitor withdrawals or RMDs? Are you satisfied with your monitoring process for withdrawals?
Now, we want to hear about your findings! Please share your perspectives in the discussion below.
Download the "Monitoring Your Allocation, Progress and Life Stages" Worksheet
Questions about coursework, webinars, worksheets, etc.? Drop your inquiries in the discussion below. We're happy to help!
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Jenna Brashear
AAII Community Manager
Chicago, IL
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