November 22, 2017

The critical difference between desired and required returns

We probably all remember during those long difficult car trips as children repeatedly saying such irritating things to our parents as: “When do we get there?”. Perhaps adding to reinforce the point, “I knew we would never get there”. And then pleading whenever a fast-food joint appears on the horizon: “I NEED an ice cream”. Fast forward to today and think how we broadly face similar fundamental, yet much more complex, issues regarding our retirement savings. Astute investors set their long-term goals – the parallel being the destination of those seemingly-endless childhood road trips – and then work out how to get […]
November 16, 2017

Realism-v-reality – working part-time as retirees

Are you planning to boost your retirement income by doing some part-time work once you eventually retire? Perhaps you have included the expectation of some paid work in your calculations about how much you need to finance your retirement. If so, this leads to another question: How realistic is that expectation? A recent research paper, Retirement transitions in four countries, may help provide some answers. More than 5560 pre-retirees (who are planning to retire within 10 years) and recent retirees (who retired over the past 10 years) age 55-75 took part in the study covering Australia, the United States, United Kingdom and […]
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 […]