Links - Retirement Finance and Planning

QUOTE OF THE DAY

In the absence of an annuity, capital is safety. -John Walton 

CHART OF THE DAY

RETIREMENT FINANCE AND PLANNING

Financial Security for Future Retirees,  National Institute on Retirement Security. "A new analysis indicates that Americans in nearly every state will fall far short in meeting their economic needs in retirement." 

Catch-22: Too young to retire, too old to rehire, CNBC. "…between 45 percent and 50 percent of retirees leave the workforce earlier than planned."  

Retirement is making people more miserable than ever before, MSN.com.  

Does The 4% Rule Work Around The World?, Pfau.  "In planning for retirements in the future, it is unclear whether asset returns of this century will continue to be as favorable as they were in the twentieth century, or whether savers and retirees should plan for something closer to the average international experience."  

2015 Risks and Process of Retirement Survey, SOA.  

Use a Rainy Day Fund to Manage Investment Risk in Retirement, Ken Steiner. 

A New Framework for Comparing Withdrawal Strategies, John Walton.  "At tilt of positive infinity spending equals the actual rate of return. In the real world, where returns are highly variable and equilibrium may take more than a lifetime to reach, a positive tilt gives a gentle nudge (0 < tilt < 1) or a hard shove (tilt > 1) back toward capital stability and sustainable income.  Positive tilt, however applied, is a form of self-correction to the portfolio and income. It reduces longevity risk and acts like a good financial advisor to put the portfolio back on track."  

Dan Ariely on the Power of Irrational Thinking,  CFA Institute. "Comparing the purchase of a new bicycle to depositing money into a retirement account, for example, is much more difficult than comparing apples to oranges."  

Don't Bet Your Retirement On History Repeating Itself, Pfau. " U.S. financial markets have entered uncharted waters now in regards to the low bond yields and high stock market valuations facing investors." 

The make-or-break factor in retirement: Keeping a budget. Washington Post.  " According to a 2013 Gallup poll, two-thirds of Americans do not keep a budget. While that might work for you while you’re working, it’s an entirely different story when you retire."  

Why Most Retirees Will Never Draw Down Their Retirement Portfolio, M Kitces. "it’s crucial to recognize that accumulating “excess” retirement dollars and seeing the retirement account balance grow, particularly in the first half of retirement, doesn’t mean the retiree is underspending. In fact, spending down the retirement principal early in retirement would be a sign of trouble. Accumulating continued growth throughout the early years of retirement is actually the normal, prudent course of action for anyone who anticipates living a long time, fears the potential impact of future inflation, and therefore recognizes the need for the retirement portfolio to grow in the early years to defend against the uncertainties of a long retirement future."  

Understanding Longevity Insurance – How A Longevity AnnuityFits Into A Retirement Income Portfolio, Kitces. [this might be something I linked to earlier] 

Some Initial Thoughts on the "Divide by 20" Ideaas a Retirement Spending Rule, by Me.  "I view 4% a little like jogging with an IED.  It can be done but you'd better be pretty careful."