It’s All About the Present Values, Part III

Present value is the organizing principle of the Actuarial Approach recommended on this website. Retirement sustainability ultimately depends on a single question: Can the present value of your assets support the present value of your planned lifetime spending? The ratio of these two quantities — your funded status — provides an actuarially coherent measure of retirement readiness and a disciplined way to monitor financial solvency over time.

Many readers find present value calculations challenging, particularly when applied to long‑range spending plans. The Actuarial Financial Planner (AFP) workbook is designed to handle this complexity for you. All inputs are entered in the Input & Results tab, and the AFP automatically performs the present value calculations in the PVCalcs tab using risk‑adjusted discount rates. These discount rates allow you to compare the present value of non‑risky assets with the present value of essential spending on a consistent basis.

It’s All About the Present Values, Part II

In our January 13, 2026 post, we thanked Dr. Wade Pfau for highlighting that present value calculations are the “heart and soul of retirement financial planning.” Present value is the foundation of the Funded Status framework: when you divide the present value of your household’s assets by the present value of your planned spending (your spending liabilities), you obtain a powerful metric that helps answer the central retirement question — How much can I afford to spend?

A Progressive COLA‑Cap Approach for Strengthening Social Security’s Finances

This week, Advisor Perspectives published my article entitled, “Social Security’s Short‑Term Crisis: What Advisor’s Must Prepare For.” The primary purpose of this article was to focus on possible solutions to the system’s short-term financing problems, not its long-term financial problems. One of the alternative solutions discussed in the article involved freezing cost‑of‑living increases (COLAs) for several years. While a temporary freeze is an efficient short‑term lever, it is also regressive and politically difficult. An alternative approach is to modify the COLA formula itself in a way that protects lower‑benefit retirees while moderating both short-term and potential long-term cost growth.

This post outlines a progressive COLA‑cap mechanism that accomplishes those goals.

Planning Your Discretionary Spending in Retirement — Like Ordering Off a Menu

Sustainable retirement spending begins with quantifying the present value of your essential expenses and then allocating the remaining funded status toward discretionary “menu items” such as travel, hobbies, or gifts. Most retirees struggle not because they overspend, but because they lack a framework for understanding how long their discretionary choices remain sustainable. The Actuarial Financial Planner (AFP) provides that structure.