Wade Pfau, Ph.D., CFA, RICP®
The Federal Reserve’s decision to cut its benchmark federal funds rate from 1% to a range of 0% raises significant questions for those reassessing their retirement nest egg—a common occurrence following a dramatic selloff in equities according to resea…
Read MoreAs the stock market experienced unprecedented growth over the past eleven years, many people were naturally less interested in the lifetime income options from pensions or annuities. Who wouldn’t rather have all the assets today so they can invest them…
Read MoreConsider three scenarios: An individual investing a lump-sum amount for thirty years An individual saving a fixed percentage of a constant inflation-adjusted salary at the end of each year over a thirty-year accumulation period An individual withdrawin…
Read MoreA simple approach for building a financial plan is to decide on a rate of return for the investment portfolio and to plug that value into a spreadsheet to represent assumed asset growth. Historical data may be used to calculate historical average retur…
Read MoreAdjustments for Current Bond Yields An important consideration is that current interest rates are lower than the historical averages. The historical average return is not relevant for someone seeking to estimate future market returns from today’s start…
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In February of 1998, the Trinity study established the idea of focusing on success and failure rates, building into our psyche the idea that your retirement is a failure if the investment portfolio is depleted. This has put too much emphasis on the portfolio and spending conservatively to keep failure rates low. This is not…
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Total-return investing focuses on building diversified portfolios from stocks and bonds to seek greater long-term investment growth. By focusing on total return, the objective over the long run is to produce a greater and steadier amount of income relative to what could be obtained by investing for income by focusing solely on interest and dividends…
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Many people approach retirement planning as if they’ll monotonically spend the same amount year after year throughout their retirement. This assumption certainly makes the planning process significantly simpler, but it’s not realistic. Our spending desires (and needs) change over time.Many people want to take advantage of their early retirement while they are still spry and…
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When it comes to financial planning, Vanguard’s “Alpha” and Morningstar’s “Gamma” are really just the tip of the iceberg. For instance, neither study considered how to incorporate home equity into a retirement income plan. We could consider the naïve strategy to be the conventional wisdom of considering a reverse mortgage only as a last resort option in retirement. If you read…
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