Time to Perform Your January 1, 2020 Actuarial Valuation

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, 2020. We also encourage you to prepare an “Actuarial Report” to document your thought process and your planning decisions.  The purposes of this year-end planning exercise are to:

Looking to Calm Those Retirement Spending Fears?

Are you losing sleep because you think you’re spending too much in retirement?  Or maybe you’re spending too little now because you are worried about possible future expenses?  A recent article by Christopher Carosa, entitled, “Why Are We Seeing More Cases of ‘Fear of Spending’ Among Retirees?” discusses this latter fear.  Mr. Carosa notes, “After a career focused on saving, when it comes time to retire, the saving tap is turned off and the spending tap is (supposed to be) turned on.  For many retirees, that’s when the sudden fear of spending kicks in.  And there may be indications this phobia is reaching pandemic levels.”

Actuarial Budget Calculator (ABC) Tips

One of the basic building blocks for the actuarial approach that we advocate for developing a spending budget and for basic personal financial retirement planning is the Basic Actuarial Balance Equation for personal finance.  We provide several Excel workbooks in the “Spreadsheets” section of our website to help individuals and couples perform the present value calculations required to solve this equation, based on their data: