Your Retirement Number Is Meaningless
Retirement is this big unknown for so many folks, that when someone offers to nail it down to a concrete number, of course people will line up. The only problem is, it’s meaningless.
3 Ways To Incorporate Bonds Into Your Retirement Strategy
Bonds can be incorporated directly into a retirement strategy in three broad ways:
1. An assets-only approach to build a total returns investment portfolio,
2. Matching the duration of bond funds to the duration of the retirement liability, and
3. Holding individual bonds to maturity to generate the desired cash flows to fund expenses on an ongoing basis throughout retirement.
Dynamic Programming Methods For Retirement Income
In addition to other methods we’ve discussed, a third type of variable spending model uses dynamic programming methods. These methods rely on complex computing power and mathematical equations to integrate spending and asset allocation decisions more completely over the life cycle.
Dynamic programming provides a road map at each point in time for optimal spending and asset allocation, which have been determined by first considering optimal future behavior stemming from today’s decisions.
Comparing Retirement Spending Rules Using Historical Data & The PAY Rule™
Thus far, we have looked at applying a 4% initial withdrawal rate to the different retirement spending strategies. In such cases, we did not use an XYZ rule to calibrate the level of downside risk as the initial spending rate was always the same.
Do You Need an Emergency Fund in Retirement?
Most retirees struggle with how to deal with their emergency fund. It’s there to help you deal with, well, emergencies. Retirees are just as prone to emergency as others, if not more so.
How Much Wealth Will You Have 30 Years Into Retirement?
Thus far, we have compared the historical performance of various spending strategies when the initial spending rate is 4%. Over the next couple weeks, we will apply an XYZ rule and consider how spending may be impacted by the low-interest-rate environment facing retirees.
Should Legacy Goals Be Part of Your Retirement Plan?
Figuring out how to plan for your legacy goals is a nice problem to have. But that doesn’t mean you shouldn’t worry about it. Whether or not legacy goals are part of your plan can seriously impact what your retirement will look like. Including them means you’ll have less to spend on yourself (and you’ll […]
Which Retirement Spending Strategy Is Right For You?
Deciding on the right retirement spending strategy for your particular situation is both incredibly difficult, and incredibly important. There are huge numbers of reasonable options, but how do you know which is right for you? The answer depends on several factors.
How Flexible Is Your Retirement Spending Plan?
A lot of expenses are negotiable, but many just aren’t. You have to buy groceries. You have to pay your homeowner’s insurance premiums. You have to go on that golf trip this winter (this one may be open to debate). As we’ve discussed in the past, it can be very useful to break expenses down […]
Retirement Spending And Required Minimum Distributions
One final spending rule serves as a reasonably easy way to implement an actuarial method for retirement spending. Actuarial methods generally have retirees recalculate their sustainable spending annually based on the remaining portfolio balance, remaining longevity, and expected portfolio returns.
