What is a systematic withdrawal plan?

A systematic withdrawal plan is designed specifically to allow individuals to make scheduled withdrawals from their investment accounts, typically for the purpose of generating income. This approach provides a structured way for investors to receive funds periodically, which can be particularly useful for retirees or individuals seeking consistent cash flow from their investments.

With this type of plan, investors can create a reliable income stream by specifying the amount and frequency of the withdrawals—such as monthly or quarterly. This method contrasts with more reactive or flexible withdrawal strategies and aims to provide predictability in cash flow management.

The other options describe different concepts related to investment management, such as rebalancing investments, minimizing risks, and increasing contributions. However, they do not specifically address the purpose and structure of a systematic withdrawal plan, which is fundamentally about facilitating planned disbursements from an investment portfolio.