It’s Time, Once Again, to Measure Your Funded Status

Happy New Year! It’s the time of year that we ask you to perform your actuarial valuation to measure your Funded Status. We have updated the Actuarial Financial Planner (AFP) spreadsheets for this purpose and encourage you to use the granular spending budget that we outlined in our previous post together with the updated AFP spreadsheets, to measure your January 1, 2025 Funded Status. 

Better Planning Starts with Granular Budgeting, Part II

This post is a follow-up to our post of November 19, 2024.  In it, we discuss how updating your spending budget each year is an important step in the process of successfully managing your finances in retirement.  We will also provide some tips on how to accomplish this task using the Actuarial Financial Planner.

For most retired households, spending is not linear from year to year.  It can vary significantly, especially if spending on non-recurring items is involved.  Therefore, static financial planning approaches that assume constant real-dollar spending from year to year (like the 4% Rule or Monte Carlo models that develop a probability that the household will be able to spend $X per year) can lead to under- (or over) spending in retirement, and just as important, can lead to spending that is inconsistent with household spending goals.

How Long Do You and Your Spouse Plan to Live?

This post focuses primarily on the implications of assuming, or planning, to live longer than one’s life expectancy. 

For the purpose of this post, we are going to assume that when you are asked how long you plan to live and you reply, “I plan to live to 95 (or 100),” you actually have a financial plan, and it involves assuming that you will die at age 95 (or 100).

Should You use a Dynamic Process with Guardrails to Keep Spending on Track in Retirement? Yes, But Not with a Monte Carlo Model Typically Used by Financial Advisors

This post is a follow-up to our post of March 7, 2021 and several other of our posts and articles noting that a model like the Actuarial Financial Planner (AFP) is a better model to use when employing a dynamic process to keep spending on track during retirement.