At a glance, a withdrawal policy statement (WPS) shows you how much money you can pull out each and every year of your retirement. The WPS can be customized to show you monthly income, quarterly, semi-annually or an annual income. Plus, it can vary for your age. Many people are more fit and active in the early years of retirement. They want to pull out more money early on, during the fun years. The WPS enables you to plan for vacations, family trips, more entertainment and a larger eating-out budget, and more.
On the other hand, some people worry about health expenses near the end of their retirement. The WPS can provide a large amount of money near the end of your life for long-term care expenses, like a nursing home. If you are worried about alzheimer’s and other forms of dementia, the WPS can provide a cushion of money to pay for your care. This provides you ease-of-mind today.
With a withdrawal policy, you can invest the money for the long haul, earning possibly much higher rates of return. Many people fear investing in equities today because of Covid-19, world events, and other reasons. This can make it dangerous to stay retired because the portfolio needs to grow over the long haul. The WPS provides steady income and allows the retiree to stay invested for the long haul.
A withdrawal policy statement provides an increase in income each and every year. You can give yourself the best chance to stay ahead of inflation. By knowing in advance what the increase in income will look like, the retiree can rest assured that she will not lose her purchasing power. Again, the WPS provides peace of mind in advance of the first income check.