A. There are many different retirement income strategies to pursue, but given that different people have different risk tolerance levels and different ways to measure success, it's very hard to say which retirement income strategy is the best.
Let's use the following example to illustrate:
Imagine that a 65-year-old couple is trying to decide how much to spend for a 30-year retirement from their $1,000,000 portfolio, and how that portfolio should be invested. The seemingly simple trade-off choices might include:
A) Spend an inflation-adjusting $30,000/year from the portfolio, by putting 90% of it into an immediate annuity and keeping the other 10% in cash reserves
B) Spend an inflation-adjusting $45,000/year from the portfolio, and invest it 50/50 in stocks and bonds
C) Spend an inflation-adjusting $60,000/year from the portfolio, and invest it 100% in stocks
Which one of the above strategy is the best?
The answer is it depends, see table summary below: