November 8, 2017

How to develop a “dynamic” approach to retiree spending

As we recently discussed, the combination of historically-low yields, expected muted investment returns and growing life expectancies are making it particularly challenging for retirees to calculate how much to draw down from their retirement savings. A critical issue here is how much retirees can withdraw from their portfolios each year to finance their current spending and to generate future income for the rest of their lives, no matter how long. It’s challenging. Two traditional approaches are to draw down a set percentage each year of a portfolio’s value or to set a dollar amount to withdraw in the first year of […]
November 1, 2017

How our investment past can damage our investment future

Most investors can probably have investment experiences that have shaped how they behave as investors in the future. For instance, an investment, in say, a single stock, may have been highly profitable as you happened to buy and sell at the right time. However, such an experience may give you make you overconfident in your abilities as an investor, including in your perceived ability to somehow pick future winners. By contrast, a past investment loss from perhaps buying when markets were at a high and selling after markets had heavily fallen may lead you to having an excessive aversion to […]
October 25, 2017

Think ahead about smart retiree spending and investing

A common personal finance trap is to concentrate on saving and investing to finance our eventual retirement without thinking enough in advance about how to invest and spend that money in retirement. Given that we have so much going on in our lives long before retirement –such as our careers, dependent children, home mortgages and trying to save – this focus on accumulation is understandable. But it’s only part of the equation. It makes sense to begin developing smart retiree spending and investing strategies long before retiring. This should help you think about what are your personal and investment goals […]