Social Security as an “Investment”
The alternative to treating Social Security as insurance is to view it as an investment, or as a gamble on how long one lives. This can be problematic.
Inflation and Your Retirement Plan
Planning for inflation is crucial when designing your retirement plan. While the average annual inflation rate from 1926 to 2023 was around 3.01%, expectations for the future are somewhat different. In this article, we explore how Treasury Bonds and TIPS (Treasury Inflation-Protected Securities) help us gauge future inflation expectations and how this impacts retirement planning. […]
What is Risk?
Risk is one of those complicated concepts that you can’t really pin down to one definition, but it’s the single most important factor for investors.
Social Security: The Best Annuity Money Can Buy
A final frame for viewing the Social Security claiming decision is as an annuity purchase.
How Time Horizon and Discount Rate Affect Your Social Security Decision
One way to view the decision to delay Social Security as an “investment” is by using a present value calculation to identify which strategy can provide the most lifetime Social Security benefits and which strategy creates the lowest funding needs for your investment portfolio. This calculation requires deciding on a time horizon and a discount rate.
Fixed Horizons vs. Survival Probabilities in Retirement Planning
How long you are going to live (and spend) is an incredibly important number in your retirement plan. Unfortunately, we really have no way to determine this number when you are planning for retirement. We certainly have ways of estimating your future longevity by looking at life expectancy numbers – essentially the likelihood that you […]
Essential vs. Discretionary Spending: Planning Your Retirement Budget
Not all of your spending is created equal. And it would help if you didn’t pretend like it is. But it’s distressingly common for people to simply decide they want a certain amount of income each year in retirement and leave it at that. Even leaving aside how our spending changes throughout retirement, it’s essential […]
Transitions in Retirement: A Whirlwind of Change
Retirement is sometimes portrayed as a relatively uneventful, static chapter in life. In fact, nothing could be further from the truth! For most, retirement will be filled with significant life changes and transitions. Some of these changes we pursue, some we must learn to accept, some transitions can happen concurrently while others may require our […]
What to Do in Retirement: Finding Purpose Beyond the Numbers
There’s a lot of focus on the “numbers” in retirement planning. And there’s a lot of focus on the specific tools and techniques that you can use. But there’s not much focus on actually being retired. But that’s what all of the spreadsheets, and research, and calculations are there to support. And all of the […]
How Useful is Historical Data in Predicting Future Returns?
Effectively all of our understanding of finance and investing is based, at least to some degree, on historical returns. But how good of a guide is the past? Is it actually different this time? We’ve already talked about the limitations of models in how we understand investing, and how we use statistics to analyze what’s […]
