Retirement Planning is Not an Event; It’s a Process

I recently received an email from the folks at Retirement Researcher inviting me to attend their latest Retirement Challenge. The preamble to their invitation said,

“Retirement planning isn’t an event… it’s a process, Ken.”

We couldn’t agree more, and although we have tried many times in this website to do so, we can’t say it any better. Successful ongoing planning in retirement depends less on the planning model employed and the accuracy of the assumptions used in the model and more on the process used to address deviations of actual and assumed experience as they occur.

American Academy of Actuaries New Social Security Tool is Also Deficient in Alerting the Public to Potential Cash Flow Issues

This post is a follow-up to our post of July 29, 2023 where we took the Academy to task for removing three important caveats about the Social Security Challenge tool and, therefore, potentially misleading the public about the long-term effectiveness of possible system “fixes.” In this post, we will discuss yet another feature of the tool that may also mislead the public about the effectiveness of these possible “fixes.” This feature ignores the potential negative impact on system assets of overly deferring the revenue increases or benefit reductions necessary to restore system’s actuarial balance. Thus, while certain changes may achieve actuarial balance (and even earn a “You’ve Solved It” pat on the back from the tool), these changes aren’t expected to keep the OASDI Trust fund from running out of money during the entire 75-year projection period, and therefore, should not be considered as viable, much less as a “fix.” After providing some background, we will discuss an example.