Worksheet: Building a drawdown plan

Here’s a worksheet that you can use to help prepare clients for their transition to retirement.

As clients transition to retirement, you need to help them decide how much they’ll need, and when. While each client requires a custom solution, these items should be on every checklist:

• When will you stop working? (based on the answer you can extrapolate how many years of retirement need to be funded)

• What will be your monthly basic expenses?
  • Food
  • Clothing
  • Rent
  • Utilities
  • Healthcare
  • Vehicle (insurance, gas, upkeep)
  • Debt servicing
  • Savings and investing

• What will be your planned monthly lifestyle expenses?
  • Travel
  • Recreation/hobbies (golf, tennis, theatre, etc.)
  • Dining

• What other sources of regular income do you have?
  • Government pension/benefits
  • Company pension/benefits
  • Insurance/annuity
  • Registered accounts and RRIFs

• Payout schedule
  • Determine what the client will net monthly from the steady income sources (pensions, annuities, government benefits, registered accounts and RRIFs)
  • Equity portfolios typically produce uneven monthly income streams—different parts produce different amounts because, for example, companies pay dividends at different times.
  • Some clients don’t mind getting $1,500 one month but only $1,200 another because they’re good with cash-flow planning. Others find this frustrating and need help.
  • Other clients prefer more consistency and want you to mimic a pension by funnelling the income to the cash portion of the portfolio and distribute it evenly month to month.