DEFINITION of 'Withdrawal Plan'

1) A payment structure arranged with a mutual fund in which the investor receives a set amount of funds from the fund on a periodic basis. This is also called a "systematic withdrawal plan".

2) Any strategy in which an investor liquidates a portion of their portfolio and extracts cash periodically, such as an investor selling equity shares every year to help supplement their retirement.

BREAKING DOWN 'Withdrawal Plan'

1) This type of arrangement with a mutual fund affords the investor an income stream during their retirement years while also maintaining exposure to further growth by keeping their remaining funds invested in the mutual fund for as long as possible.

2) Once an investor has finished the accumulation phase, most generally prefer to structure their spending so that their funds will last for an extended period of time. This can be done by managing a portfolio and periodically selling assets, investing in income-producing securities, purchasing an annuity, etc.

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