Wade Pfau, Ph.D., CFA, RICP®

Individual investors are vulnerable to the sequence of market returns experienced over their investing lifetimes. Individuals who behave in exactly the same way over their careers (saving the same percentage of the same salary for the same number of years) can experience disparate outcomes based solely upon the specific sequence of investment returns that accompanies…

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…

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…

You should be familiar with all the tools in your retirement income toolbox. Retirement plans can be built to manage varying risks by strategically combining the following retirement income tools in different ways. Total Return Investment Portfolios Making systematic withdrawals from a well-diversified investment portfolio is a common way to obtain retirement income. Systematic withdrawals…

As we age, the question of where and how we will receive long-term care becomes increasingly significant. While many envision institutionalized living as the inevitable solution, the landscape of care options has expanded significantly, allowing individuals to receive care in more familiar and comfortable environments. With proper planning, it is often possible to remain at…

  Originally published in Forbes. Income annuities come in a variety of shapes and sizes. Knowing which makes the most sense for your situation can be overwhelming. In this article, I will explore how income annuities work and what options are available. When do income payments start? Annuities can be either immediate or deferred. An…

Retirement income planning has emerged as a distinct field in the financial services profession. But because it is still relatively new, the best approach for building a retirement income plan remains elusive. There are two fundamentally different philosophies for retirement income planning, which I call probability-based and safety-first. Those philosophies diverge on the critical issue…