Spending Goals Archives - Retirement Researcher

How Much Income Do I Need in Retirement?

By Bob French, CFA | January 12, 2018 |

Most people are focused on saving for retirement so they’ll have the money they need to fund their income in retirement. However, ask most people how much they’re going to spend in retirement and they have no idea. To plan for retirement effectively, you need to have some sense of what your spending needs are actually going to be.

How Can Retirees Adjust Their Spending For Inflation Without Breaking The Bank?

By Wade Pfau, Ph.D., CFA, RICP® | November 15, 2016 |

A final example in the decision rules category is the Target Percentage Adjustment method introduced by David Zolt in his 2013 Journal of Financial Planning article, “Achieving a Higher Safe Withdrawal Rate with the Target Percentage Adjustment.”

Ratcheting Up Retirement Spending

By Wade Pfau, Ph.D., CFA, RICP® | November 1, 2016 |

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.

Floor And Ceiling Retirement Spending, With A Twist

By Wade Pfau, Ph.D., CFA, RICP® | October 25, 2016 |

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.

Seeking A Fixed Percentage Approach To Retirement Spending

By Wade Pfau, Ph.D., CFA, RICP® | October 4, 2016 |

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.

The Problems With A Constant Retirement Spending Strategy

By Wade Pfau, Ph.D., CFA, RICP® | September 27, 2016 |

The first method to be tested is the original constant inflation-adjusted withdrawal strategy introduced in William Bengen’s 1994 article, “Determining Withdrawal Rates Using Historical Data.” This will serve as a baseline for subsequent comparison with other strategies. Bengen’s rule says to adjust spending annually for inflation and maintain constant inflation-adjusted spending until the portfolio depletes.

The Most Important Investment Decision You’ll Ever Make

By Bob French, CFA | September 22, 2016 |

When most people think about investing, they’re thinking about stuff that doesn’t really matter. They’re caught up in the minutiae: What fund should I own? How fast did the iPhone 7 sell out (and are people really going to be okay with no headphone jack)? What sector is going to take off this fall? But that’s not really what determines your portfolio’s fate. What really matters is your ratio between stocks and bonds.

10 Variable Spending Strategies Retirees Should Consider

By Wade Pfau, Ph.D., CFA, RICP® | September 20, 2016 |

By reviewing existing research on variable spending, we can identify and describe key representative variable spending strategies from the countless possibilities, and classify them into a general taxonomy.

The Perks Of Being A Flexible Spender In Retirement

By Wade Pfau, Ph.D., CFA, RICP® | September 8, 2016 |

William Bengen’s 1994 article introduced the concept of the 4% rule for retirement withdrawals. He defined the sustainable spending rate as the percentage of retirement date assets which can be withdrawn, with this amount adjusted for inflation in subsequent years, such that the retirement portfolio is not depleted for at least thirty years.

Which Are You More Worried About: Running Out Of Money While You’re Alive Or Dying?

By Wade Pfau, Ph.D., CFA, RICP® | September 6, 2016 |

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.

How Much You Should Spend In Retirement Depends On How Long You Think You’ll Live

By Wade Pfau, Ph.D., CFA, RICP® | September 3, 2016 |

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.

How Long Can Retirees Expect To Live Once They Hit 65?

By Wade Pfau, Ph.D., CFA, RICP® | August 25, 2016 |

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.