TITLE

A Phased-Income Approach to Retirement Withdrawals: A New Paradigm for a More Affluent Retirement

AUTHOR(S)
Robinson, Charles D.
PUB. DATE
March 2007
SOURCE
Journal of Financial Planning;Mar2007, Vol. 20 Issue 3, p44
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
• Traditional withdrawal planning starts at the beginning of retirement by identifying a "safe" withdrawal rate. The phased income approach discussed in this article takes a significantly different approach by starting its focus on risk-based issues at the end of retirement. It then works backward to create a wealth-distribution strategy that aligns retirees' income with their changing needs during retirement. • This phased approach estimates and funds income beyond age 95 to minimize the risk of outliving assets. It also addresses risk-based needs for health care, long term care (LTC), and legacies. • It estimates income for ages 85-95, then creates a contingency plan that defers the life annuity decision to age 85 to preserve flexibility and leverage the mortality premium to support higher income in the early years of retirement. • It then uses the remaining assets to fund twin ten-year income bridges for age 65-75 and 75-85. • Testing against historical data from 1926 to 2005, there was no phased income scenario in which a retiree ran out of money. • On average, the process generated the following outcomes: (1) It generated initial income at age 65 that was nearly twice the traditional 4 percent solution (2) It produced more cumulative income from age 65 to 95 than the traditional method, while leaving a residual value at age 95 to provide a legacy or to increase total income. (3) Because the tested model elected to retain residual values, it produced slightly less consumable income beyond age 95 than the traditional methods, but left income to help pay estimated health care and LTC premiums from 65 to 105, assuming 7 percent inflation.
ACCESSION #
24345357

 

Related Articles

  • Income-Harvesting Strategy: Achieving Inflation-Adjusted Income from a Lump-Sum Asset. Parker, Zachary S. // Journal of Financial Planning;Aug2008, Vol. 21 Issue 8, p52 

    • This study, a Judge's Grant winner in the 2007 Financial Frontiers Award competition, is designed to develop and test a new strategy for producing a highly successful inflation-adjusted income stream from a lump-sum asset. The income-harvesting strategy was developed to take the focus...

  • Fundamentals of Retirement Planning. Kelly, Leslie // ACA News (American Chiropractic Association);Jun2010, Vol. 6 Issue 6, p16 

    The author focuses on how working professionals and business owners can formulate a projection of the income they will need in retirement. Examining checking accounts and bills paid for three months captures expenses. Figuring in Social Security income, personal investments, retirement plan...

  • Attorneys ready to hang suits on fees. Whiddon, Robert L. // Employee Benefit News;4/15/2005, Vol. 19 Issue 5, p42 

    Explains that lawyers and other retirement plan consultants in the U.S. think that fee complaints by plan participants and not company stock suits are the more insidious threat to the health of retirement plans. Impact of asset-based fees on retirement savings; Discussion on the problems of...

  • Retirement Plan Participation Picks Up, EBRI Says. Thomas, Trevor // National Underwriter / Life & Health Financial Services;10/18/2004, Vol. 108 Issue 39, p8 

    Reports on the increase in the percentage of workers participating in an employment-based retirement plan in the United States in 2004. Decline in the percentage of people working for an employer that sponsors some kind of retirement plan; Impact of the stagnant economy on the decline in...

  • PSNC 2013: Participant Behavior and What It Means to Maximize It. Russell, Corie // Plan Advisor News;2013, p139 

    The article focuses on issues related to participant behavior which were discussed at the 2013 Plansponsor National Conference in the U.S. Carol Waddell of J.P. Morgan Retirement Plan Services said that plan sponsors should keep their retirement plan information simple while making it personal....

  • PSNC 2013: Participant Behavior and What It Means to Maximize It. Russell, Corie // Plan Advisor News;2013, p139 

    The article focuses on issues related to participant behavior which were discussed at the 2013 Plansponsor National Conference in the U.S. Carol Waddell of J.P. Morgan Retirement Plan Services said that plan sponsors should keep their retirement plan information simple while making it personal....

  • Sponsors Still Need Convincing About Certain Plan Features. Moore, Rebecca // Plan Sponsor News;2013, p122 

    The article discusses the results of Oculus Partners' "2012 Perspectives Study: Retirement Plan Consultants," which showed that plan sponsors are slowly embracing the idea of addressing retirement income readiness for their participants. Advisers cite creating a secure retirement and offering a...

  • Fewer Seniors Delaying Retirement. Couch, Noel // Plan Advisor News;2015, p1 

    The number of senior workers delaying their retirement is at its lowest now than at any point in the post-recession period.

  • The Devil Is in the Details. Stein, Michael K. // Journal of Financial Planning;Mar2000, Vol. 13 Issue 3, p32 

    This article focuses on the evolution of modern retirement planning in the U.S. It is noted that the success or failure of many retirements is determined by details that may not always get the attention they deserve in the planning process. In the first decades of the 20th century, the rate of...

Share

Read the Article

Courtesy of VIRGINIA BEACH PUBLIC LIBRARY AND SYSTEM

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics