What is Decumulation ?

Decumulation is a word that you may have heard in financial discussions, but you may not know what it actually means. In simple terms, “decumulation” is defined as the conversion of assets accumulated over the course of your working life into income to be spent after retirement. It sounds simple and easy enough, but decumulation can come with new risks, such as the risk of running out of funds if done incorrectly or too quickly.

The stage before decumulation is called accumulation. The accumulation stage begins when you start saving money for retirement and typically ends when you retire and begin to withdraw money from your savings pot – known as “distributions”. 

Moving from the accumulation stage to the decumulation stage requires a shift in mindset, and you may be wondering how to proceed. Should you continue to work? Should you sell your house? Should you continue to make investments? And what about insurance, health care, Social Security, employer retirement plans and IRAs? 

It can be a lot to take in and consider, especially if you have just finished a long working career and are just ready to settle down, relax and enjoy your retirement!

Managing your retirement investments can seem a lot to handle. According to a study, many investors see their retirement incomes reduced by high costs and poor decision making due to misguided advice. This has effects not just on retired people, but on the wider economy. 

If you have been in the past, or still are, a contributor to a defined-contribution plan, you may assume that everything has all been worked out for you already by experts. However, this is a dangerous way to think and can lead to losses on your part. 

After retirement, your accumulated savings will need to be converted into retirement income, and you will be in charge of managing this yourself. You may find yourself with many different investment options, and be solely responsible for ascertaining the viability and longevity of these options. 

There are various things to consider. If your assets are in riskier investments susceptible to market fluctuations, you may want to consider making larger, more frequent withdrawals. If your investments have more long-term security, it can be useful to keep more assets invested in order for them to accumulate value until you need the money.  

It can be useful to develop a systematic withdrawal plan. You can set up automatic dollar or percentage withdrawals at certain time intervals, but it is worth factoring in things such as your life expectancy and any potential changes in expenses (e.g. future medical or care bills) when developing a withdrawal plan.


An optimal retirement plan includes Social Security, a Personal Pension Plan, and an asset withdrawal plan. It is important to consider the various options for decumulation to reduce risks of financial trouble and allow you to enjoy your retirement with a sense of security. However, retirement doesn’t mean that your investing days are over if you don’t want them to be – many investors use the increase in free time that comes with retirement to spend more time researching the market so that they can continue to profit from investments!

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