The Society of Actuaries has published an article authored by me in its May/June issue of the Pension Section News. The article is entitled, “Using Sound Actuarial Principles to Better Manage Retirement Finances.” In this article I make a case for why I believe the actuarial profession should take a more active role in helping retirees and near retirees develop reasonable spending budgets.
The problem of determining how much to spend in retirement is a basic actuarial problem that requires an actuarial solution. A November, 2014 Survey of financial advisors by Russell Investments concluded that not enough financial advisors were using “math and science to develop spending budgets for their clients and should be periodically comparing the client’s assets with the client’s liability (the present value of the future withdrawals from the accumulated assets) similar to how actuaries measure the funded status of pension plans.” This was a clear shout-out to the actuarial profession to step up its game and become part of the solution.
The public voice of the actuarial profession is the American Academy of Actuaries. The stated mission of this profession body is to serve the public and the United States actuarial profession. “Through its public policy work, [the Academy] seeks to address pressing issues that require or would benefit by the sound application of actuarial principles.” I suggest in the article that helping retirees and near retirees develop reasonable spending budgets is indeed a pressing issue for our country that would benefit significantly by the sound application of actuarial principles.