Can Your Artwork Collection Fund Your Spending in Retirement?

One of the key determinants of how much you can afford to spend in retirement is the amount of assets you have accumulated. All things being equal, the greater your assets, the more you can afford to spend. This truism can readily be seen from the following basic actuarial balance equation for personal finance.

Present value of assets = Present value of future spending + Rainy day fund

This equation, of course, is the basis for the Actuarial Approach and the Actuarial Financial Planner models found in our website. The ratio of the left-hand side of the equation to the present value of future spending is the Funding Status metric we encourage you to use to measure, monitor and make changes to your spending plan.

Personalize Your Lifetime Planning Period (LPP) Assumptions

In our December 31, 2025 post, we referred to a three-step process that we encouraged you to use to replace the default LPP assumptions in the Actuarial Financial Planner to refine and personalize your Funded Status measurements. 

Last week, Advisor Perspectives published my article entitled, “Use This 3-Step Process to Develop Better End-of-Life Assumptions for Your Clients.” We include the three steps in this post from that article. A link to this article is also available in the “articles” section of our website.

It’s All About the Present Values

In Episode 211 of their Retire with Style podcast series, Dr. Wade Pfau and Alex Murguia discuss the importance of using present values in financial planning for retirement.  They conclude their podcast by saying that present values are “the heart and soul of retirement financial planning calculations,” and “It only took us 200+ episodes to get to the heart of the matter.”  We agree. 

Measuring and Managing Financial Risks in Retirement

In prior posts, we’ve discussed the three M’s that constitute the actuarial process for keeping your spending in retirement on track and consistent with your spending goals:

1. Measuring your Funded Status each year
2. Monitoring your Funded Status from year to year, and
3. Making changes in your assets or spending liabilities when your Funded Status falls outside a reasonable corridor (guardrails).

In this post, we will discuss two more M’s: Periodically Measuring and Managing your financial risks. If you have completed Steps 1 and 2 above as of January 1, 2026 and are contemplating increases in your spending plan this year, we suggest that now may be a good time to measure and possibly manage your financial risks before implementing your plan. Stress testing your assumptions is a relatively easy process using the Actuarial Financial Planner (AFP) to see what the results of changing assumptions or inputted data has on your Funded Status.