Sunday, November 28, 2021

There’s a Much Simpler and More Robust Financial Planning Tool for Retirees Than a “Risk-Based Guardrails Model”

In their November 24, 2021 Kitces.com post, Dr. Derek Tharp and Justin Fitzpatrick once again tout their risk-based guardrails financial planning model for financial advisors to use with their retired clients. In their post, they state,

“a risk-based guardrails model can provide clients with a more accurate picture of how much they can sustainably spend than can models based on static withdrawal rates or withdrawal-rate guardrails” and

“movement from withdrawal-rate guardrails to risk-based guardrails represents a significant improvement in planning quality for retirees!”

Feel free to read their post if you are interested in a risk-based guardrails planning concept. 

Saturday, November 27, 2021

Growing, Protecting and Spending Your Assets in Retirement—Finding the Right Balance with The Actuarial Financial Planner

How much you can afford to spend in retirement (or leave to your heirs) is a function of how much assets you possess. Generally, the more assets you have, the more you can afford to spend. Most retirees need to invest (grow) their assets in order to maintain or increase their desired standard of living in retirement. At the same time, however, retirees need to protect their assets and watch their spending to ensure that:

  1. sufficient amounts remain throughout the entire period of their retirement to fund at least a minimum (essential) standard of living, and
  2. other spending goals are achieved.

Wednesday, November 17, 2021

Using the Actuaries Longevity Illustrator in Your Retirement Planning

The Actuaries Longevity Illustrator (ALI) has recently been updated to reflect mortality changes made in the 2021 Trustees’ Report for Social Security. We have therefore also updated our actuarial workbooks to reflect these changes. Like prior year changes, the changes in this year’s version were not major (no more than one year increases or decreases in lifetime planning horizons from the prior year) even though the 2021 Trustees report reflected the increased pandemic mortality experience in 2020.

Saturday, November 13, 2021

Using the Actuarial Financial Planner for Retirees

In our last post, we introduced our new Actuarial Financial Planner (AFP) workbooks for Single Retirees and Retired Couples. Several of our readers had questions about the new workbooks, so we decided to address these questions with an example in this post. We will also take this opportunity to discuss a related topic--investment in bonds vs. purchasing lifetime annuities.

Friday, November 5, 2021

Our Favorite One-Tab Actuarial Financial Planner for Retirees and Near Retirees

We are happy to add two more Excel Spreadsheets to our toolbox of MS Excel actuarial spreadsheet tools—The Actuarial Financial Planner (AFP) for Single Retirees and the Actuarial Financial Planner for Retired Couples. These spreadsheets are very similar to our Actuarial Budget Calculators (ABCs), but differ in the following ways: