Longevity
Reverse Engineering To Desired Retirement Time Horizons
This article is part of a series; click here to read Part 1. Using the portfolio return and volatility assumptions determined in Exhibit 1.1, we then reverse engineer fixed return assumptions and sustainable spending levels for a desired retirement time horizon and…
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Taking Portfolio Spending Into the Real World for Retirees
There has been too much emphasis on the portfolio and spending conservatively to keep failure rates low. This is not the whole story for retirement income. Certain circumstances, which we will explore, may allow retirees to accept a higher probability of “failure,” and spend more aggressively from their investment portfolio.
Read MoreWhat’s the Most Appropriate Planning Age for Retirees?
The relationship between how long you’ll live and your sustainable spending rate is a big piece of the retirement planning puzzle.
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How Likely Is It That You’ll Live Past 80?
One way to deal with the uncertainty of how long you’ll live when you plan for retirement is to look at survival probabilities.
Read MoreWhat are Longevity Goals?
Of all of the different goal types, longevity goals are probably the least intuitive. Your longevity goals are based around the possibility that you will live longer than you expect. That sounds great, but your income plan needs to be able to…
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Seeking A Fixed Percentage Approach To Retirement Spending
The fixed percentage withdrawal strategy is the polar opposite of constant inflation-adjusted spending. Subsequent strategies we consider will strive to strike a balance between these two. This fixed percentage strategy calls for retirees to spend a constant percentage of the remaining portfolio balance in each year of retirement.
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Which Are You More Worried About: Running Out Of Money While You’re Alive Or Dying?
As David Blanchett says: failure is really only failure if wealth is depleted while you are still alive, not just over an arbitrarily long time period.
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How Much You Should Spend In Retirement Depends On How Long You Think You’ll Live
In regards to my last column, I find it helps to visualize the data, and Exhibit 1 shows the specific spending rates for a variety of asset allocations and retirement lengths. It also shows the withdrawal rates implied by the required minimum distribution (RMD) rates set by the IRS for tax-deferred retirement accounts.
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Should You Plan On Your Retirement Lasting 30 Years Or 40?
The 4% rule has a planning horizon of thirty years. But is that a long enough horizon?
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How Long Can Retirees Expect To Live Once They Hit 65?
Life expectancy is tricky. Average life expectancy at birth is 71 years, but it’s constantly changing depending on your age and myriad other factors.
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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.
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What Is The ‘Retirement Spending Smile’?
Our spending desires (and needs) change through time. Blanchett observes a “retirement spending smile” that varies slightly for retirees with different household spending levels.
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