Tuesday, June 2, 2020

Actuaries Release New Essay Collections of Effective Retirement Planning Ideas

The Society of Actuaries has released two new essay collections containing ideas to improve retirement planning.  We encourage you to read these collections (or, at least the ones we wrote).  The two essay collections are:


These collections contain a number of good ideas.  Since we don’t all think alike, we may disagree on which ideas actually constitute the “good ones.”   So, while not all of the ideas presented in these collections may resonate with you, we believe that that reading the essays will help you in developing your own retirement plans.  For example, we thought Max Rudolph, made a number of good points in his essay, “Take Ownership of Your Retirement Process: Oversight Tool to Understand Risks.”
Max Rudolph, FSA, MAAA, CERA is the founder of Rudolph Financial Consulting, LLC in Omaha, Nebraska and is highly respected in actuarial risk management circles.  His practice focuses on risk management tools that help organizations make better decisions.  Some of the “common sense” points Max made in his essay that particularly resonated with us, include the following:
  • “I believe it is important to develop your own tools for retirement planning, skipping the free dinners offered by those selling a “solution.” It may be the right one, but why not have a tool that can double check the work? There is no one-size-fits-all solution to retirement planning, and most products offered to retirees pay the person selling them at the point of sale, leaving you to accept the result, whether it is great or terrible.”
  • “I have found that most advisory firms overgeneralize or provide complex stochastic simulations I have trouble relating to. My results will not be the average across 10,000 scenarios. I want to know what scenarios cause me to run out of money so I can mitigate that risk by working longer, saving more, buying longevity annuities or following some other path which allows me a higher likelihood of remaining financially independent.”
  • “The benefit to building your own spreadsheet, with your personal and unique circumstances, is to do a variety of what-if analysis scenarios. For someone near retirement, looking at the amount to pull each year is extremely important. For someone younger who builds in an accumulation phase, the savings amount is likely more important to think about today.”
  • “Each future retiree will be well served to access, or build, their own model that tests resiliency to assumptions like these, as well as what age to start Social Security benefits, long-term care insurance options and whether to add longevity annuities to protect against running out of income at the older ages.”
  • “By owning the retirement process, an individual can make better choices for their family and be less dependent on employers or advisory firms that have conflicts of interest. Only YOU are entirely aligned with your choices and the results they produce. Be accountable and enjoy greater independence or a larger bequest.”
Max suggests that you build your own retirement planning spreadsheet.  This may not be practical for everyone.  The next best thing to building your own personal financial spreadsheet, in our opinion, is to use a robust one that you understand and can modify.  Feel free to use the spreadsheets located in our website so that you can “own your retirement process” as discussed by Max and by us, most recently in our post of January 31, 2020.   That is why we put them there.