How Much Can I Afford To Spend In Retirement?

If you are a financial consultant, does the advice you give your clients depend about how you are paid? If you are a retiree and work with a financial advisor, will his or her advice depend on how your advisor is compensated? In another fine post, Michael Kitces talks about the possible impact of financial advisor settlement on the partiality of advice given.

” In his post, Michael targets development of financial software, but his ultimate goal is to encourage advisors to provide impartial, “real” advice. Thank you for bringing up this unsavory subject, Michael. Full Disclosure: As noted in my own Biography, I’m a retired pension actuary without knowledge in financial planning or investments.

I receive no immediate or indirect compensation from appointments to this site or from any activity associated with this website. I will not try to sell you insurance products, try to manage your investments or give you advise regarding how to reduce your fees. My mission is merely to encourage you to use basic actuarial concepts to control your spending in retirement.

  • Best Dividend Stocks
  • Gold and Silver
  • Specifically recognized cash moves from a secured asset or
  • Inflation: 7.5 percent
  • ► January (32)
  • 9 / 7 = 2.8556%

Sorry, I won’t be providing you with any sexy software for this function. Monitoring actual spending vs. To use an old football metaphor, I focus on the “blocking and tackling” of spending in retirement. Here are some are admittedly generalizations that don’t connect with all financial advisors and especially do not apply to financial advisors who charge an hourly rate for his or her advice.

Interestingly, Michael Kitces is a staunch proponent of the 4% Rule. This rule and other static (“safe) drawback rate methods were generally developed by financial advisors who also inspired their clients to invest significant portions of their retirement assets in equities. Many of these advisors down-played the advantages of insurance products as purchase of the products would reduce AUM, and for that reason their potential payment. More and more academics and retirement experts are uncovering that the optimal investment of retirement assets may incorporate some mixture of pooled risk lifetime insurance products and investments.

The Actuarial Approach advocated in this site develops actuarial finance that coordinates the two types of resources to meet retiree objectives by coordinating a retiree’s total property with her total liabilities. It doesn’t just “tap” the retiree’s savings by utilizing a static withdrawal percentage. In addition, it tells the retiree whether his or her spending is on track from calendar year to season and displays changes in investments and actual spending.