The 'tomorrow' bucket could be the most natural home for smoothed funds in this type of income withdrawal strategy. This bucket aims to protect tomorrow’s money while also capturing long-term growth. Smoothed funds are particularly well-suited to this purpose, as they offer a blend of stability and growth potential.
By allocating assets across different timeframes, the bucket approach not only mitigates risk but also ensures that clients have access to the funds they need when they need them, without being forced to sell investments at an inopportune time.
Smoothed funds can play an important role in helping advisers plan according to a client’s risk tolerance, desire for growth, income needs, and flexibility requirements.
They should be a key consideration during retirement income planning conversations and strategy development, serving as a versatile tool at various points in a client’s journey to, and through, retirement.
Claire Altman is managing director for individual retirement at Standard Life
