One of the key determinants of how much you can afford to spend in retirement is the amount of assets you have accumulated. All things being equal, the greater your assets, the more you can afford to spend. This truism can readily be seen from the following basic actuarial balance equation for personal finance.
Present value of assets = Present value of future spending + Rainy day fund
This equation, of course, is the basis for the Actuarial Approach and the Actuarial Financial Planner models found in our website. The ratio of the left-hand side of the equation to the present value of future spending is the Funding Status metric we encourage you to use to measure, monitor and make changes to your spending plan.
Please note that we are talking about spending your assets in this post and not withdrawing x% of your investment portfolio that strategic withdrawal plans, like the 4% Rule, encourage you to do. Other retirement experts want you to think about withdrawals from your portfolio as annual income (or paychecks) and to compare whether this amount exceeds your annual expenses. Unlike these approaches, the Actuarial Approach develops a spending plan based on your spending goals and all your assets (and liabilities). It is not a withdrawal plan based only on some of your assets.
So, can your artwork collection (or your antique car collection, or any of a number of other types of assets you may own) be used to fund your spending in retirement? If you own the asset and can sell it, then the answer is yes.
Many households have complicated financial situations and may own properties, businesses, collectibles and other assets that they would like to use for retirement, but these assets may not be easily valued or artificially “converted” into income. If you have any of these types of assets, you may wish to revisit our post of July 17, 2025 for tips on how to use the Actuarial Financial Planner workbooks to value your hard-to-value assets and include them in your Funded Status calculation.
Summary
If you are struggling to apply the 4% Rule or some other systematic withdrawal approach to your financial situation because you have hard-to-value assets, or your financial advisor is not properly reflecting your hard-to-value assets in their Monte Carlo models, we suggest that you switch to the Actuarial Approach and use a better metric for managing your spending that reflects all your retirement assets and spending liabilities—Your Funded Status.
