How Much of Your Retirement Assets Should be Allocated to Your “Floor” and “Upside” Portfolios?

As former pension actuaries, we aren’t going to tell you how you should invest your retirement assets.  Our Actuarial Budget Calculators (ABCs), however, can give you a pretty good idea of the value of assets you should currently have to cover your expected future essential expenses.  This information can be useful in helping you decide how much risk you may want to take in your current investment strategy.  

You Need to be Flexible and Have a Plan to Win the Retirement Game

We all enter the “Retirement Game” with our pot of assets to invest and spend.   Many of us are just content to finish the game without running out of assets.  Some of us want to maximize our spending and not leave too much on the table at the end of the game.  Others of us want to leave large amounts to heirs.  Some of us don’t want to have significant spending fluctuations from year to year.  Winning the Retirement Game clearly depends on one’s goals, but it is safe to say that most Retirement Gamers would rather finish their game with too much rather than too little assets.

300th Post—We’ve Added a Smoothing Tab to the Actuarial Budget Calculators (ABC’s) for Retirees

Hard to believe that this is our 300th blogpost.  Almost all of these posts have encouraged our readers to employ the same basic actuarial principles we learned as pension actuaries to help them develop a reasonable spending budget.   During these past nine years, we have continuously refined our messages and improved our tools, but the basic actuarial principles we advocate haven’t changed.  More importantly, we continue to passionately believe that the use of these principles can enable individuals like you to make better financial decisions.

Pension Actuaries to Discuss Solutions to the Lifetime Income Challenge

We’re excited to see that a panel of pension actuaries will be discussing decumulation of retirement savings at the upcoming 2019 Enrolled Actuaries Meeting.  According to the session description:

“Pension actuaries are well positioned to play an important role in developing solutions to the lifetime income challenge.  In this session we explore emerging solutions and strategies to optimize the effectiveness of retirement savings.”

If You Aren’t Separately Budgeting for Non-Recurring Expenses, You Probably Don’t Have a Robust Retirement Spending Budget

We here at “How Much Can I Afford to Spend” are all about the annual spending budget.  But we don’t tell you:

• how to invest your assets;  
• how much of your assets you should actually spend each year, or 
• how you should spend your assets.
  

Expand Your Spending Categories in 2019 for Better Personal Retirement Budgeting & Planning

To help you develop a more robust spending budget and facilitate your retirement planning, we encourage you, in this post, to consider allocating your spending in retirement to a minimum of the following four categories:

• Essential Recurring 
• Non-Essential Recurring 
• Essential Non-Recurring 
• Non-Essential Non-Recurring
  

2018 Year-End Review and 2019 Budget Development - Part II

As part of our ongoing effort to encourage you to think more like an actuary when it comes to your personal finances, this post will recommend that you to perform an actuarial valuation based on your personal data as of January 1, 2019, and prepare an “Actuarial Report” to document your thought process and your planning decisions.  The purposes of this exercise are to:

2018 Year-End Review and 2019 Budget Development-Part I

At the end of every calendar year, we encourage you to take just a little bit of the time that you might otherwise spend watching college football bowl games and devote it to reviewing your financial situation and developing your spending budget for the next year.  This year, we are going to devote two posts to this process.  In Part I, we are going to discuss year-end planning approaches in general.   In Part II, we will once again encourage you to perform an “actuarial valuation” of your assets and spending liabilities to measure how well you did in 2018 and to develop your 2019 spending budget “data points”.

Top 10 Reasons Why the Smoothed Actuarial Budget Benchmark is Superior to IRS RMD for Developing Spending Budgets

Since the name of our website is “How Much Can I Afford to Spend in Retirement,” we frequently receive requests from readers to comment on alternative retirement spending/budget strategies that they read about.  With the release last year of the research report, “Optimizing Retirement Income by Integrating Retirement Plans, IRAs and Home Equity,” there has been much written about using the IRS Required Minimum Distribution (RMD) approach recommended in the report to determine annual amounts to be withdrawn from accumulated savings.  The report was released by the Stanford Center on Longevity (SCL) in collaboration with the Society of Actuaries (SOA) under the direction of Steve Vernon, Joe Tomlinson and Wade Pfau.  Most recently Mr. Vernon discussed the use of the IRS RMD approach in his CBS MoneyWatch article, “An IRS Rule that can aid your retirement income strategy.” 

Optimal Equity Allocation?

Since we are retired actuaries and not financial advisors, we don’t advocate any particular investment strategy in this blog.  For example, we don’t tell you how much of your assets should currently be invested in life annuities, bonds, cash equivalents, real estate or equities (particularly in these somewhat turbulent times for investing).  We do, however, provide several tabs in our Actuarial Budget Calculators (ABCs) that you (or your financial advisor) may find useful in developing your investment strategy.  This post will discuss these tabs and how they might be used.