Retirement Insights
Three questions to evaluate longevity risk for retirees
Longevity risk—the risk of running out of assets before running out of time—is fundamental to retirement. We know about the distribution of longevity for the overall population, but an individual cannot know in advance precisely where he or she will fall in the distribution. The length of your retirement could be much shorter or longer…
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What Is The ‘Retirement Spending Smile’?
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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How Did Investors Survive the 1980s?
The following is an excerpt from our ebook, “Investing Through the Decades,” which you can download by clicking here. Throughout history, when bad news and events touched the daily lives of investors and caused nest eggs to shrink, it’s been natural to ask, “Is this the end of investing as we know it? Have new…
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Does Your Retirement Plan Account For Your Own Cognitive Decline?
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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Understanding the Tools in Your Retirement Income Toolbox
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…
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Should I Stay or Should I Go? Housing Decisions in Retirement
A plan to meet housing needs is an important part of a retirement income strategy. A home provides an emotional anchor, providing daily comfort and shelter, memories, and nearness to friends and community. Homes are also a major source of wealth for retirees and near-retirees. Home equity provides between 45 and 75% of median household…
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The Continuum of Long-Term Care
Many 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…
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The Importance of Planning for Long-Term Care
Most 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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What’s the Difference between Budgeting and Financial Planning?
Everyone knows the story of the tortoise and the hare: A speedy hare ridicules a slow-moving tortoise until the tortoise proposes a race. The hare agrees, bolts past the tortoise and then, certain he’ll win, takes a nap break halfway through. The tortoise keeps on, slow and steady, and the hare awakes to find he’s…
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