Links - Retirement Finance and Planning

QUOTE OF THE DAY

…people are often surprised to learn it is specifically designed for a thirty-year retirement. The 4% rule wasn’t necessarily meant to apply to eighty-five-year olds, nor can it be safely used by early retirees who leave the workforce by age forty. --Pfau

CHART OF THE DAY

  

RETIREMENT FINANCE AND PLANNING

Maximizing Retirement Spending: Is That Really What It’s AllAbout? Darrow Kirkpatrick.  Beyond a point, I simply don’t feel good about burning through more of the world’s limited resources so I can experience slightly more entertainment or pleasure on a given day…Follow personal finance to its heart and you arrive at the door of prudence and stewardship. 

Optimal Purchasing of Deferred Income Annuities When PayoutYields are Mean-Reverting, Huang, Milevsky, Young.  "the optimal behavior of a risk-averse consumer resembles an asymmetric dollar-cost averaging strategy, with a portion of the DIA-budget spent even while payout rates are below historical averages."  

Determinants of the Stated Probability of Purchase forLongevity Insurance. Michael A Guillemette, Terrance K Martin Jr, Benjamin F Cummings and Russell N James III.  

The Real Option to Delay Annuitization: It's NotNow-or-Never, Milevsky and Young.  "…we estimate that the real option to defer annuitization (RODA) is quite valuable until the mid-70s or mid-80s (depending on one's gender and risk aversion), at which point fixed immediate life annuities become the optimal asset class." 

Creating a Synthetic Short Annuity -- The Implications ofAnnuity Replication for the Annuity Puzzle, Arbitrage, Speculation andPortfolios, Sutcliffe. 

Meeting Retirement Goals with Dimensional’s Target-DateRetirement Income Funds, Pfau, Advisor Perspectives.  

Non-profit work after retirement… NYT.  

Sequence of Returns Risk Generally Not Devastating if YouAdjust Your Spending, Ken Steiner.  "I agree that the sequence of returns matters.  I’m not so sure that it matters more when you have just retired vs. when you have been retired for quite a while, but the point of this post is to show you that sequence of return risk can be mitigated by decreasing spending during unfavorable return periods."  

Retirement Age Inequality and Fairness. SquaredAwayBlog. "Think about what would happen if everyone retired at, say, 70. Those with less education and a lower socioeconomic status (SES) would enjoy fewer years in retirement than people with higher SES." 

Raising the Retirement Age, Fairly. Anne Alstott, Yale Law School.  "These two chapters from A NEW DEAL FOR OLD AGE (Harvard University Press, 2016) lay out criteria for inter- and intragenerational justice and show that it is possible, both technically and politically, to preserve Social Security early retirement for workers who need it while creating financial incentives for better-off workers, still able to work, to delay their Social Security claims." 

6 challenges to achieving retirement security. CBS.  "Americans from all walks of life face several overarching challenges to their retirement security and personal savings. More specifically, they have to deal with six primary obstacles that make it harder for them to put away enough money to have a secure retirement."  

Your Money: Three ways to budget for fun in retirement. Reuters.  "Fun does not just happen. You have to budget for it."  

The Retirement Plan I Would Want - Part 7, Dirk Cotton TheRetirementCafe.com.  "The typical retirement plan report is centered around a spreadsheet that purports to anticipate our future wealth annually for the next three decades despite all evidence that such forecasts are well beyond human capabilities. Even if these forecasts were credible, such a presentation makes it difficult to explain or understand the underlying strategy and it places too much planning focus on terminal wealth."