Luckily, No, I dont have a terminal illness. At least not that I know of. My wife and I (who both work at the same place) have COLA'd pensions. Part of the pension plan is a provision that allows us to have the pension payments paid into an interest bearing account that draws a guaranteed 8-10% interest based on the last 10 years avg returns of the pension fund. The interest currently sits at 9.75% and can only change .25% per year.
So my plan is to retire and have all of our pension checks paid into this "DROP" account from the day we retire. We will live off of our investments and not touch the pension or the DROP account until the investment accounts run out. At that point we will start collecting our pension payments plus be able to draw the interest from the DROP accounts forever and it will amount to having a permanent CD ladder paying 8-10% interest. We will have no stock market exposure at that point and will never have to touch the money in the DROP account which will pass on to our heirs.
So the question is how to structure the projected $1.3M - $1.5M that we will have in our portfolio at retirement to be able to draw the maximum amount possible knowing that it will run out in 10 years or so?
For round numbers, lets say I have $1.5M. I could:
a) stick it all in CDs averaging 5% and be able to draw about 12% I believe....about $180,000
b) use some other AA and hope for at least a little growth and be able to draw a bit more. In this case if the market doesnt cooperate, its no major catastrophe. I may run out of money a year or 2 early but its not like that means Im broke. It just means I have to got to phase 2 of my retirement plan earlier that planned.