Most of my readers, including myself are at the age where we are very focused on wealth accumulation and equipping ourselves with the various capital-growth and income-generating assets.

Often, we forget to think about how to shift from wealth accumulation to wealth decumulation. This is an important change in our investment strategy when we transition to retirement.

What is wealth decumulation?

Unlike wealth accumulation where the focus is on maximising returns, wealth decumulation focuses on maintaining an income stream that will be used to fund for retirement expenses. Because of the change in investment purpose, the investment choices made will be targeted on assets that can support that income stream.

A decumulating investment strategy requires a clear strategy around which asset to sell in order to fund retirement expenses and which asset to buy to continue to grow the investment portfolio so that the portfolio does not reduce to zero without taking on too much risk and volatility.