How to Build a Social Security Bridge to Help Manage Sequence Risk
Social Security is a particularly valuable source of reliable retirement income. It functions much like a lifetime inflation-adjusted annuity backed by the federal government, providing income for as long as you live and adjusting benefits over time through cost-of-living increases. For married couples, the claiming decision can also affect the survivor benefit available after the first spouse dies. Unlike […]
The Wrong Way to Decide Whether an Annuity Is Expensive
One of the hardest problems in retirement is not knowing how long your money needs to last, and that uncertainty shapes almost every decision about how much you can safely spend. If you knew with certainty that retirement would last exactly 20 years, the planning would be considerably easier because you could establish a spending […]
What Happens If Congress Does Nothing About Social Security?
If Social Security is part of your retirement plan, the headlines can be unsettling. The program’s trust funds are running down, Congress has not agreed on a solution, and future benefits may eventually be lower than the amounts shown on today’s Social Security statements. That uncertainty can make it tempting to leave Social Security out […]
Social Security Planning Is About More Than Maximizing Benefits
Anyone who has owned a home for a long time knows the most visible projects are not always the most important. Paint colors, kitchen updates, and landscaping get the attention, while the roof, furnace, and water heater do their jobs in the background until something goes wrong. Retirement planning works the same way. Investment performance, […]
Protecting Purchasing Power in Retirement
Retirement income is only as strong as what it can buy. Over time, prices rise for groceries, travel, and healthcare, making it harder to sustain your spending budget over the long term. Maintaining purchasing power is what preserves your lifestyle and standard of living. This is why retirees consider tools and strategies that keep pace […]
Which Retirement Are You Buying?
For many, the default approach seems to be to just “save what I can” for retirement. Individuals taking this approach usually save what’s “leftover” after making payments on their home, car and credit cards and covering their expenses of daily living. People generally recognize that they should save at least enough to capture their employer’s 401(k) match, if such a match exists, lest they “leave money on the table” each year.
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.
How Much Income Do I Need in Retirement?
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 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.
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.
