The Yield Curve and Break-Even Inflation

By Wade Pfau, Ph.D., CFA

Understanding the relationship between bond risk and time to maturity and duration of a bond provides the basis for understanding the bond yield curve. The yield curve shows the yields to maturity for a series of bonds—typically US Treasury bonds—with the same…

The TIPS You May Need – Treasure Inflation-Protected Securities (TIPS) – Part 2

By Wade Pfau, Ph.D., CFA

This article is part of a series; click here to read part 1. In 2003, Zvi Bodie and Michael J. Clowes published the book Worry-Free Investing: A Safe Approach to Achieving Your Lifetime Financial Goals, in which they argued that typical retirement-oriented…

The TIPS You May Need – Treasure Inflation-Protected Securities (TIPS) – Part 1

By Wade Pfau, Ph.D., CFA

In discussing retirement liabilities, it is also important to address the issue of inflation and how to think about bonds when they are meant to fund a liability that grows with the consumer price index. Fortunately, this is now practical as the…

2020 – Q1 Quarterly Market Review

By Retirement Researcher

2020- Q1 Quarterly Market Review

The Coronavirus and Its Effects on the Market and Your Retirement

By Bob French, CFA

Just like many other areas of life, the novel Coronavirus is having a significant impact on the financial markets.

2019 – Q4 Quarterly Market Review

By Retirement Researcher

2019 – Q4 Quarterly Market Review

Bond Duration

By Wade Pfau, Ph.D., CFA

Bond prices are sensitive to interest rate changes, and bond duration is a measure of just how sensitive. For instance, in Exhibit 1.1 (shown in my last article), an increase in interest rates for the simple bond from 3 percent to 4…

Understanding How Bonds Work

By Wade Pfau, Ph.D., CFA

Before we can discuss bonds in depth, it is important that we establish a common understanding of what bonds are and how they work. As a starting point, a bond is a contractual obligation to make a series of specific payments on…

Two Philosophies for Retirement Income Planning Part Two: Safety-First School

By Wade Pfau, Ph.D., CFA

This article is part of a series; click here to read Part 1. The safety-first school of thought was originally derived from academic models of how people allocate their resources over a lifetime to maximize lifetime satisfaction. Academics have studied these models…

Two Philosophies for Retirement Income Planning Part One: Probability-Based

By Wade Pfau, Ph.D., CFA

Within the world of retirement income planning, the siloed nature of financial services between investments and insurance leads to two opposing philosophies about how to build a retirement plan. There is an old saying that if the only tool you have is…

Changing Risks in Retirement, Part Three: Spending, Inflation, and Cognitive Decline

By Wade Pfau, Ph.D., CFA

This article is part of a series; click here to read Part 1. Spending shocks Unexpected expenses in retirement come in many forms, including: unforeseen need to help family members divorce changes in tax laws or other public policy changing housing needs…

Changing Risks In Retirement Pt. Two – Unknown Longevity

By Wade Pfau, Ph.D., CFA

This article is part of a series; click here to read Part 1. The fundamental risk for retirement is unknown longevity, which is summarized in the question, how long will your retirement plan need to generate income? It is the risk of…