Available through mutual funds, an automatic withdrawal linked to a mutual fund allows investors to designate a set dollar amount and a date (e.g., $300 on the 15th of each month) on which they will receive regular income withdrawals, generally by direct deposit into a bank account. The withdrawals are automated and occur systematically regardless of market conditions. Payments are made by the investment company until the account balance is depleted. Often, retirees will activate this account feature so they have income deposited monthly into their checking account as a "retirement paycheck" to handle living expenses. This strategy can work well if one can stick to a budget.
We would like your feedback on this Personal Finance Frequently Asked Question.
