A lot of attention has been given to how to invest your retirement assets prior to retirement. Relatively little attention has been given to the best way to draw down that income when the day comes that you are no longer earning a steady paycheck.

Climbing Mount Everest is a feat accomplished by few people, but not much attention has been given to the treacherous descent. That's too bad, because most of the deaths occurring on Everest happen during the descent, not the climb.


The same reality can be translated to your retirement assets. A lot of attention has been given to how to invest your retirement assets prior to retirement. Relatively little attention has been given to the best way to draw down that income when the day comes that you are no longer earning a steady paycheck. Reaching your target is important, but it isn't the only factor when you begin drawing down that income.


Ask any retiree who withstood a huge hit to their portfolio in 2008 how they feel about the sustainability of their retirement income, and you'll hear a variety of answers. Few, however, will tell you that they slept well and have no concerns about the decline in value that their portfolio had incurred.


The factors to consider when the drawdown of income begins include the sequence of your investment returns, the rate of inflation and the amount of money that you spend.


Negative returns on a retiree's investments in the first few years after retirement can create a big hole that's tough to climb out of. If it looks like your sequence of returns is starting in the red, you better have a substantial cushion or a plan to change your spending habits so you don't run out of money. This doesn't mean that you should not own any investments that may exhibit volatility, but it does mean that you should take a good hard look at exactly where the substitutes for your paychecks will come from.


The second factor that may create problems is inflation. Inflation hasn't been a huge concern in the past few years because it has been historically lower than in past periods. That is a good thing, but if you avoid volatility completely in your portfolio and avoid most risk, there is still a good chance that your nest egg is not keeping pace with inflation due to the low interest rate environment that we now live in.


The last factor for your sustainable level of income in retirement is based on how much you actually spend. And just like the sequence of returns, if you spend too much in the early years of retirement, it can cost you freedom and spending power later on in life. Be sure to know how much you'll need, and be vigilant about not exceeding that.


John P. Napolitano is the CEO of U.S. Wealth Management in Braintree, Mass. He may be reached at jnap@uswealthcompanies.com.