Retirement Answer Man

When it comes to creating your retirement withdrawal strategy there is no one-size-fits-all solution. You have to determine what is right for you. That’s why we have been exploring different withdrawal strategies this month on the Retirement Answer Man show. 

If you missed the last couple of episodes go back and listen to learn about the safety-first strategy and safe withdrawal rates. On this episode, we are digging into asset-liability matching. Press play to learn more about this hybrid approach to withdrawing your assets in retirement. 

What is asset-liability matching? 

Asset liability matching is a term that is used in the pension planning world, but you can use it to describe your own assets and liabilities. Your liabilities are your spending or the debts that you need to cover. Your assets are your financial capital. If you prefer, you can also think of your 401K as deferred income rather than as your investment assets if that helps you come to terms with spending it. 

Basically, asset-liability matching is when you match up your deferred assets with your consumption to make sure that you have your spending covered in retirement. 

Where does this strategy fall among the retirement withdrawal strategies?

On one end of the spectrum, the safe withdrawal rate strategy skims along the top of your investments. It only dips into them as needed. On the other side of the coin, the safety-first approach prefunds all or the majority of your retirement journey. 

Asset liability matching falls somewhere in between these two extremes. I may be biased towards this approach since I use this structure coupled with agile retirement management with my own clients. Since I value flexibility in retirement, this withdrawal strategy fits my ideology. 

Start thinking about which way you lean on this spectrum, so you can begin to build your retirement withdrawal strategy framework in the next episode.

What's your baseline?

To execute the asset-liability matching strategy, you’ll first need to establish a contingency fund or a standard emergency fund as a buffer. The next step is to plan your spending over the first 5 years of retirement including your tax estimates. 

Once you isolate how much you’ll need from your financial capital, then you can build an income floor. The rest of your assets can then go into a core, growth-based investment portfolio. With this strategy, you’ll get a mix of protection against sequence of return risks in the near term and a hedge against inflation in the long term. 

What are the benefits of asset-liability matching? 

This is a good strategy to use if you value optionality. Since retirement is such a big life change it is nice to have a lot of liquidity early on. Retirement does not simply mean that you stop working. Your entire life changes and it can be difficult to understand how it will change when you are in the planning stage. Having this liquidity in the income floor can give you confidence and flexibility as you navigate this momentous life change. 

Another benefit of asset-liability matching is that you mitigate the sequence of return risk. Having an income floor in place can give you many options if the world falls apart early on in retirement. 

You may want to pivot to a safety-first approach or safe withdrawal rate as you age, but asset-liability matching gives you plenty of room to adjust while you are figuring this whole retirement thing out. 

I am naturally biased towards matching assets to spending since this is the strategy that I use with my clients, but there is no single best withdrawal strategy to use in retirement. You’ll need to consider what is right for you. Make sure to listen to all 3 Retirement Withdrawal Strategies episodes to consider which strategy fits your needs and come back next week so that you can learn how to create a framework to navigate this crucial piece of retirement planning. 



  • [2:30] What is asset-liability matching?


  • [6:39] Where does asset-liability matching fall in line with the other withdrawal strategies?
  • [9:20] What is a baseline?
  • [12:50] How will you find adjustments along the way?
  • [13:43] What are the benefits of this strategy?


  • [19:15] How to calm the worry about retirement
  • [25:21] Do I take the pension or the lump sum? 
  • [29:55] What happens if your money management platform gets hacked?


  • [35:42] Do you know of a void in your first year of retirement?

Resources Mentioned In This Episode

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center

Direct download: RAM387.mp3
Category:general -- posted at: 5:00am CDT