2018 Year-End Review and 2019 Budget Development - Part II

As part of our ongoing effort to encourage you to think more like an actuary when it comes to your personal finances, this post will recommend that you to perform an actuarial valuation based on your personal data as of January 1, 2019, and prepare an “Actuarial Report” to document your thought process and your planning decisions.  The purposes of this exercise are to:

2018 Year-End Review and 2019 Budget Development-Part I

At the end of every calendar year, we encourage you to take just a little bit of the time that you might otherwise spend watching college football bowl games and devote it to reviewing your financial situation and developing your spending budget for the next year.  This year, we are going to devote two posts to this process.  In Part I, we are going to discuss year-end planning approaches in general.   In Part II, we will once again encourage you to perform an “actuarial valuation” of your assets and spending liabilities to measure how well you did in 2018 and to develop your 2019 spending budget “data points”.

Top 10 Reasons Why the Smoothed Actuarial Budget Benchmark is Superior to IRS RMD for Developing Spending Budgets

Since the name of our website is “How Much Can I Afford to Spend in Retirement,” we frequently receive requests from readers to comment on alternative retirement spending/budget strategies that they read about.  With the release last year of the research report, “Optimizing Retirement Income by Integrating Retirement Plans, IRAs and Home Equity,” there has been much written about using the IRS Required Minimum Distribution (RMD) approach recommended in the report to determine annual amounts to be withdrawn from accumulated savings.  The report was released by the Stanford Center on Longevity (SCL) in collaboration with the Society of Actuaries (SOA) under the direction of Steve Vernon, Joe Tomlinson and Wade Pfau.  Most recently Mr. Vernon discussed the use of the IRS RMD approach in his CBS MoneyWatch article, “An IRS Rule that can aid your retirement income strategy.”