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Investing Specialists

Testing a Blended Approach to Retirement Income

Neither income-centric nor strictly total return, a hybrid distribution approach charts a steady course for our retirement bucket portfolio.

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My previous simulations of how a bucket strategy would have performed since 2000 used what I call "the strict constructionist total-return" approach. By that I mean that we reinvested all income and capital gains distributions as the portfolio kicked them off, and relied strictly on rebalancing proceeds to meet living expenses. 

But how would that strategy compare to a more income-centric one, where we spend income distributions from bonds and dividend-paying stocks as the portfolio produces them? I'll be testing versions of this approach this week and next. 

Christine Benz does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.