Efficient Retirement Income
How Are You Different From The Average Investor?
Taking distributions from an investment portfolio amplifies the impacts of portfolio volatility, making retirement income planning particularly tricky as distributions tend to be the primary income source for retirees. We can use Monte Carlo simulations to show the increase of money-weighted investment returns in retirement, which has important implications about the choice for a fixed portfolio return assumption.
Read MoreRatcheting Up Retirement Spending
In 2015, Michael Kitces proposed a ratcheting rule for retirement spending that shared the basic framework of constant inflation-adjusted spending while still allowing spending to increase if the portfolio performs well in retirement. As with many of these rules, the ratcheting rule could be implemented in numerous ways.
Read MoreA Simple Way To Keep Your Portfolio In Line
Investing isn’t simply picking the best funds or building your perfect portfolio. Keeping your portfolio in line over the long term is just as important (if not more so).
Read MoreFloor And Ceiling Retirement Spending, With A Twist
In a 2013 article, a Vanguard research team headed by Colleen Jaconetti developed an alternative form of the floor-and-ceiling spending rule that relies on percentages rather than hard dollar amounts.
Read MoreA Terrible Way To Protect A Retiree From Inflation
People seem to think commodities (especially gold) are suitable guards against inflation. I want to explain why that’s not true, and tell you about some of the much better tools available.
I want to explain why that’s not true – at least over any useful time frame – and then tell you about some of the much better tools available.
Read MoreA Brief History of Social Security
Recipients of Social Security benefits today are not just retirees – they’re disabled workers, spouses and young children of deceased or disabled workers, and the spouses and survivors of retirees. This was not always the case.
Read MoreAnnuity Pricing Sensitivity
With all of my discussions of annuities lately, it is worthwhile to also consider the sensitivity of annuity pricing to interest rates, gender and age-related mortality factors. Relationship Between Payout Rates and Interest Rates Figure 1 estimates the relationship between annuity payout rates and interest rates for 65-year old males, females, and opposite-gender couples with…
Read MoreThe Value of Financial Advice
I am often asked whether it is worth the cost to hire a financial advisor. After all, they charge you money to make you money. People say they can listen to the news and know where and how to invest, so, “Wouldn’t I be better off just keeping that fee for myself?” That is an excellent question with an answer that depends on many factors.
Read MoreWhite Paper: Reduce Retirement Costs with Deferred Income Annuities Purchased Before Retirement
This study uses a methodology proposed by Milevsky (2006) to evaluate the impact of guaranteed income products on the cost of funding retirement and shows when, and for which clients, a deferred income strategy makes sense.
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