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Home>UPDATE: What I've learned over 14 years of covering the 'depressing' -- but crucial -- topic of retirement

UPDATE: What I've learned over 14 years of covering the 'depressing' -- but crucial -- topic of retirement

UPDATE: What I've learned over 14 years of covering the 'depressing' -- but crucial -- topic of retirement

09/30/2017

Others, meanwhile, have suggested lower targets. In 2010, Hewitt's Retirement Income Adequacy at Large Companies: The Real Deal, said retirees need 15.7 times their final year's salary (http://www.aon.com/attachments/thought-leadership/Hewitt_Research_Retirement_Income_Adequacy_2010.pdf) to fund a decent retirement. Social Security represented 4.7 of 15.7 target, which meant other sources would have to account for the rest, or 11x. Lincoln Financial weighed in the topic a few years ago and came up with 10x as did Fidelity (https://www.fidelity.com/viewpoints/retirement/how-much-money-do-i-need-to-retire). And then there's Larry Kotlikoff, a professor at Boston University, who argued in 2007 that we are saving too much for retirement (http://www.marketwatch.com/story/youre-being-tricked-into-saving-too-much-for-retirement). Who to believe and trust? What if you don't save enough? What if you save too much and don't need it all; you, in essence, denied yourself a better standard of living while you were working?

There's also conflicting advice about retirement-income withdrawal strategies. Some espouse the floor-and-upside approach, some recommend guardrails, others espouse time segmentation, buckets and ladders, and still others espouse a four-box approach (http://www.marketwatch.com/story/retirement-income-for-life-4-box-strategy-2012-11-08). There's no best practice; what you get is all a matter of a particular adviser's training and education, regulatory environment, business model, and biases and preferences.

Read: The entire financial advice profession needs to be fixed (http://www.marketwatch.com/story/think-your-financial-adviser-has-to-act-in-your-best-interest-think-again-2016-04-08)

There's also lots of conflict generated by various institutions. What the Insured Retirement Institute, the lobbying group for insured retirement products (i.e. variable annuities) says about retirement is often at odds with what the Consumer Federation of America might say.

And we won't even discuss the fuss over the Labor Department's on-off-on-off-again conflict of interest rule (https://www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/completed-rulemaking/1210-AB32-2).

So where does that leave us?

The easy way to plan for retirement

I often say that if you knew your date of death, I could create for you a bulletproof retirement. We would know how much you need to save, how long your money needs to last, what withdrawal rate to use, how to invest your money, what glide path to use, how to allocate your assets to fund your desired standard of living and still manage and mitigate retirement risks, and so on. But alas, we don't know your date of death. So, instead, we have to build retirement plans the good old-fashioned way.

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