Wade Pfau, Ph.D., CFA, RICP®
Many people approach retirement planning as if they’ll monotonically spend the same amount year after year throughout their retirement. This assumption certainly makes the planning process significantly simpler, but it’s not realistic. Our spending desires (and needs) change over time.Many people want to take advantage of their early retirement while they are still spry and…
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When it comes to financial planning, Vanguard’s “Alpha” and Morningstar’s “Gamma” are really just the tip of the iceberg. For instance, neither study considered how to incorporate home equity into a retirement income plan. We could consider the naïve strategy to be the conventional wisdom of considering a reverse mortgage only as a last resort option in retirement. If you read…
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You should be familiar with all the tools in your retirement income toolbox. Retirement plans can be built to manage varying risks by strategically combining the following retirement income tools in different ways. Total Return Investment Portfolios Making systematic withdrawals from a well-diversified investment portfolio is a common way to obtain retirement income. Systematic withdrawals…
Read MoreMany receive long-term care at their homes or at community centers or adult daycare centers. Institutionalized living is not always required, and proper long-term care planning may allow one to remain at home longer than otherwise possible. For many, staying at home will be preferable during the transition when more long-term care assistance starts to…
Read MoreMost of the research about retirement income planning focuses on two of the three major retirement risks: sequence of return risk and longevity risk. The third one, the risk of severe spikes in spending due to unforeseen expenses, receives much less coverage. Being able to meet a predetermined spending plan alone is not sufficient. There must…
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Originally published in Forbes. Income annuities come in a variety of shapes and sizes. Knowing which makes the most sense for your situation can be overwhelming. In this article, I will explore how income annuities work and what options are available. When do income payments start? Annuities can be either immediate or deferred. An…
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Retirement income planning has emerged as a distinct field in the financial services profession. But because it is still relatively new, the best approach for building a retirement income plan remains elusive. There are two fundamentally different philosophies for retirement income planning, which I call probability-based and safety-first. Those philosophies diverge on the critical issue…
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