Tranche Methodology—Funding Your Future
Retirement isn’t a single event: it’s a 30+ year time frame over which you will need to take distributions.
It’s also a 30+ year time frame over which your investments will continue to grow.
Depending on your future distributions and when you need them, each slice of the portfolio is allocated based on the expected returns, investment timeframe, and your risk profile.
If you plan to retire next year, the investment slice, or tranche, for that year will be invested conservatively, so you know it will be there when you need it. However, a distribution you won’t need for 10 years can be invested more aggressively as it has time to grow.
In this way, you can have confidence the money you need near-term will be safely invested, while money you won’t need for several years can grow appropriately.
Typical Tranche allocation: near term distribtutions are safely and conservatively invested. Distributions with a longer time horizon can be more aggressively invested with time to grow and recover—based on client's risk profile.