No. VI — MEASURED + MODELED
The check is made of something
A distribution is a transfer from the fund to the shareholder. The lab asks what funded it; the answer may be income, gains, principal, or a mixture.
What the models assume — defaults and their provenance
| Field | Default | Status | Rationale |
|---|---|---|---|
| startingBalance | $1,000,000 | Illustrative | Round starting value chosen to make percentage and dollar effects legible. |
| years | 30 yr | Illustrative | Round decumulation horizon used for scenario exploration. |
| annualSpending | $40,000 | Illustrative | Round first-year withdrawal chosen to expose sequence effects. |
| inflation | 2.50% | Illustrative | Round long-run spending-escalation assumption. |
| benchmarkReturn | 6.73% | Illustrative | Initial pre-hydration return copied from the balanced benchmark gross mean. |
| cefAssetReturn | 6.73% | Illustrative | Matched gross return prevents the wrapper comparison from assuming superior or inferior underlying assets by construction. |
| cefExpense | 1.03% | Illustrative | Uses the industry report’s 1.03% median management fee only as scenario context. |
| leverage | 20.00% | Illustrative | Round leverage scenario below the common debt asset-coverage boundary. |
| financingRate | 5.00% | Illustrative | Round cost used to expose the sign of the asset-return-minus-financing spread. |
| startDiscount | -6.12% | Illustrative | Uses the dynamic page’s all-CEF 6.12% discount only as an existing scenario starting point. |
| endDiscount | -6.12% | Illustrative | Neutral base path assumes no discount change. |
| distributionRate | 8.00% | Illustrative | Round high-distribution scenario chosen for the accounting demonstration. |
| distributionCoverage | 80.00% | Illustrative | Diagnostic split used to visualize a payout’s modeled earned and returned-capital portions. |
| distributionCut | 20.00% | Illustrative | Round stress event used to demonstrate that scheduled cash flow is not guaranteed. |
| distributionCutYear | 8 | Illustrative | Places the illustrative cut early enough to affect a 30-year path. |
| mean | 6.73% | Illustrative | Existing arithmetic mean for the broad 60/40 proxy. |
| volatility | 10.61% | Illustrative | Existing normal-return model volatility for the 60/40 proxy. |
| fee | 0.03% | Derived | Low-cost investable implementation example for the comparator. |
| mean | 6.90% | Illustrative | Existing fixed-return proxy for an otherwise changing glide path. |
| volatility | 11.70% | Illustrative | Existing normal-return volatility proxy for the target-date scenario. |
| fee | 0.08% | Sourced | Acquired-fund expense ratio reported by VTTHX. |
| mean | 7.94% | Illustrative | Existing expected-return proxy for the total U.S. stock market. |
| volatility | 16.47% | Illustrative | Existing normal-return volatility proxy for U.S. total-market equities. |
| fee | 0.03% | Sourced | Expense ratio reported by VTI. |
| stockAllocation | 67.60% | Derived | Dated description of the selected target-date implementation. |
| sleeveWeight | 10.00% | Design choice | Default bounded case selected from the required 0%, 10%, 15%, and 100% sleeve controls. |
| netInvestmentIncome | 4.00% | Illustrative | Illustrative compatibility amount used to replace the old two-bucket coverage display with explicit sources. |
| realizedGains | 2.40% | Illustrative | Illustrative compatibility amount chosen so explicit default sources preserve the legacy 8% total. |
| returnOfCapital | 1.60% | Illustrative | Illustrative compatibility amount chosen so explicit default sources preserve the legacy 8% total. |
| netInvestmentIncomeShareOfLegacyEarnedAmount | 0.625 | Design choice | Deterministic compatibility split needed because version-one URLs had only earned-versus-returned-capital coverage, not explicit NII and gain fields. |
| cashReserveYears | 1 yr | Design choice | Neutral starting position for the separately identified liquidity-reserve control. |
| coreDistributionRate | 2.00% | Illustrative | Round cash-delivery rate used to distinguish core cash flow from CEF distribution policy. |
| cefExpense | 0.68% | Illustrative | Low-fee favorable wrapper input; numerically similar to the report’s pre-1981 cohort average. |
| leverage | 20.00% | Illustrative | Moderate borrowed-exposure scenario. |
| financingRate | 3.00% | Illustrative | Favorable financing-cost scenario. |
| endDiscount | -2.00% | Illustrative | Favorable discount-narrowing scenario. |
| distributionCut | 0.00% | Illustrative | Favorable scenario includes no distribution cut. |
| cefExpense | 1.56% | Illustrative | High-fee stress input; numerically similar to the report’s 2021-2026 IPO-cohort average. |
| leverage | 33.00% | Illustrative | High borrowed-exposure stress scenario near the common debt asset-coverage convention. |
| financingRate | 7.00% | Illustrative | Adverse financing-cost scenario. |
| endDiscount | -16.00% | Illustrative | Adverse discount-widening scenario. |
| distributionCut | 40.00% | Illustrative | Severe distribution-cut scenario. |
| paths | 5,000 | Design choice | Runtime and sampling-noise tradeoff for an in-browser illustration. |
| seed | 20,260,812 | Design choice | Fixed seed makes scenario output reproducible. |
| assetReturnFloor | -95.00% | Design choice | Numerical guardrail prevents a normal draw from producing less than a 95% one-year loss. |
| p10 | 0.1 | Design choice | Lower displayed outcome percentile. |
| p50 | 0.5 | Design choice | Displayed median outcome percentile. |
| p90 | 0.9 | Design choice | Upper displayed outcome percentile. |
Sourced: derived from a named, dated document. Derived: calculated from sourced inputs. Illustrative: round number chosen for legibility, not a recommendation. Design choice: technical implementation decision. Change any input in the lab to explore its effect.
Lab 1
Follow the distribution dollar
Question: Does the form of cash delivery create return or protect wealth by itself? Set each source directly; no generic coverage rate is used to infer return of capital.5,9,10
Mechanism
NAV before - cash paid = NAV after
Cash paid
$80,000
8.0% of starting NAV
NAV after payment
$920,000
before market movement
Distribution source controls
Result
Take the distribution
$80,000 cash + $920,000 invested = $1,000,000
Sell the same amount
$80,000 cash + $920,000 invested = $1,000,000
Before taxes and transaction frictions, equal cash delivery leaves equal economic wealth. Return of capital can be tax-deferred and non-destructive when total return supports the policy, or accompany erosion when it does not. The source label alone cannot decide.
Limits: Section 19 notices use estimates that may change. Final Form 1099-DIV character, basis, account type, lots, taxes, spreads, and commissions can make after-tax distribution and sale outcomes differ.
Model method and limitations
Expected path. Both strategies receive the selected gross asset assumption. Benchmark return is reduced by its stated proxy fee. CEF NAV return equals asset return plus leverage times the asset/financing spread, less the modeled management-fee input applied to managed assets. The default is not a total operating-expense ratio and omits other fund expenses. Market value also reflects the selected change in discount.
Cash accounting. Desired spending is identical. Distribution cash is tracked separately and never added to total return. Surplus is reinvested; a shortfall is met by selling shares. Returned capital is a source label, not an automatic verdict on tax efficiency or investment quality.
Risk paths. The seeded simulation draws annual normal returns from the selected mean and volatility, with common draws for both strategies. It omits fat tails, serial correlation, taxes, spreads, manager dispersion, and forced deleveraging. It is a sensitivity tool, not a backtest, recommendation, or forecast.
No independently audited IFRI composite or reproducible public holdings history was found. The model therefore tests the economic claims around the wrapper; it does not claim to simulate Selengut's actual portfolio.
AI assistance and verification requirements
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The book itself (Retirement Money Secrets) was not available for page-level review during the evidence set through August 13, 2026. Claims attributed to the book in this review are based on public-page descriptions and publisher-supplied metadata. Those claims should not be treated as confirmed book content.
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Sources and complete references
Sources
Legacy reference list
- 1.Apple Books. Retirement Money Secrets: book metadata and publication date ↗
- 2.The Income Coach. Book page and public description of the thesis ↗
- 3.The Income Coach. IFRI strategy and author materials ↗
- 4.SEC Investor.gov. Investor Bulletin: Publicly Traded Closed-End Funds ↗
- 5.FINRA. Opening Up About Closed-End Funds ↗
- 6.Investment Company Institute. Frequently Asked Questions About Closed-End Funds, 2026 ↗
- 7.U.S. Code. 26 USC 852: taxation of regulated investment companies ↗
- 8.U.S. Code. 26 USC 4982: excise tax on undistributed income ↗
- 9.SEC. Return-of-capital and managed-distribution notice ↗
- 10.IRS. Publication 550: Investment Income and Expenses, 2026 update ↗
- 11.Closed-End Fund Association. Premium/discount reports, July 2026 ↗
- 12.Lee, Shleifer & Thaler. Investor Sentiment and the Closed-End Fund Puzzle, NBER ↗
- 13.CEF Advisors. CEF Fee Review 2025 to 2026 ↗
- 14.J.P. Morgan Asset Management. 2026 Long-Term Capital Market Assumptions ↗
- 15.Vanguard. VTI fact sheet, June 30, 2026 ↗
- 16.Vanguard. BND fact sheet, June 30, 2026 ↗
- 17.Vanguard. Target Retirement 2035 fact sheet, June 30, 2026 ↗
- 18.SEC Investor.gov. Target Date Funds Investor Bulletin ↗
- 19.S&P Dow Jones Indices. SPIVA U.S. Scorecard ↗
- 20.S&P Dow Jones Indices. U.S. Persistence Scorecard, year-end 2024 ↗
- 21.Clare et al.. Sequence risk and retirement outcomes, 2020 ↗
- 22.SEC IAPD. Steven Robert Selengut, individual summary ↗
- 23.The Income Coach. Start the FIRE course page ↗
- 24.The Income Coach. Services, pricing, and referral terms ↗
- 25.The Income Coach. Selection Universes ↗
- 26.Skool. RMS Income Investing Community ↗