Retirement Researcher

8
Apr

Is Buying an Annuity in a Zero Interest Rate Environment a Good Idea?

Is Buying an Annuity in a Zero Interest Rate Environment a Good Idea? The Federal Reserve’s decision to cut its benchmark federal funds rate from 1% to a range of 0% raises significant questions for those reassessing their retirement nest egg—a common occurrence following a dramatic selloff in equities according to research conducted by Indiana University’s Alessandro Previtero —and the

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3
Apr

Is Buying an Annuity in a Bear Market a Good Idea?

Is Buying an Annuity in a Bear Market a Good Idea? In Safety-First Retirement Planning: An Integrated Approach for a Worry-Free Retirement, I explain how including annuities with lifetime income protections alongside other investments can lay the foundation for a more robust retirement income plan that is less vulnerable to market downturns and outliving savings. As the stock market experienced

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1
Apr

Adjustments For A Conservative Return Assumption

Adjustments For A Conservative Return Assumption Consider three scenarios: An individual investing a lump-sum amount for thirty years An individual saving a fixed percentage of a constant inflation-adjusted salary at the end of each year over a thirty-year accumulation period An individual withdrawing the maximum sustainable constant inflation-adjusted amount from a portfolio at the start of each year over a

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27
Mar

A Guide to a Conservative Return Assumption

A Guide to a Conservative Return Assumption A simple approach for building a financial plan is to decide on a rate of return for the investment portfolio and to plug that value into a spreadsheet to represent assumed asset growth. Historical data may be used to calculate historical average returns for different asset classes, which are then combined to create

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24
Mar

Planning For The Future – What About Bond Yields?

Planning For The Future – What About Bond Yields? Adjustments for Current Bond Yields An important consideration is that current interest rates are lower than the historical averages. The historical average return is not relevant for someone seeking to estimate future market returns from today’s starting point. The general problem with attempting to gain insights from the historical outcomes is

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19
Mar

What To Do When Markets Plummet – Investor Behavior Gap

What To Do When Markets Plummet – Investor Behavior Gap Another concern is whether investors are disciplined enough to stay the course with the investment strategy in order to earn the underlying index market returns. Studies on retirement spending from investment portfolios typically assume that retirees are rational investors who rebalance right on schedule each year to their rather aggressive

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17
Mar

Making Your Investments Work For You: Things To Consider

Making Your Investments Work For You: Things To Consider Inflation We must remove inflation so the numbers allow for a better understanding of purchasing power growth. Real returns will be less because they preserve the purchasing power of wealth over time. Providing the discussion in terms of real returns allows us to plan for the assumption that future spending will

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11
Mar

How Much Can Retirees Spend On March 11, 2020? It May Not Be What You Think

How Much Can Retirees Spend On March 11, 2020? It May Not Be What You Think Turbulent market volatility and declining interest rates are leaving many people wondering about the viability of their retirement plans. Given where markets are today, will you have enough to meet your retirement spending goals? Attention often turns to the 4% rule, which is a

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10
Mar

How Much Should We Depend On The Stock Market?

How Much Should We Depend On The Stock Market? Simple analyses, which look to historical returns as estimates for what retirees should expect in the future, tend to provide an incomplete picture that may overstate the potential for stocks relative to other strategies. We will investigate some of the adjustments that should be made to historical returns to obtain a

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4
Mar

Inflation, Deflation, Confiscation & Devastation- The Four Horsemen Of Risk

Inflation, Deflation, Confiscation & Devastation- The Four Horsemen Of Risk Noted financial advisor and historian William Bernstein makes a compelling case for stocks in his e-book Deep Risk: How History Informs Portfolio Design. In the introduction, Bernstein begins by offering an operational definition of risk. Risk is the size of real capital loss times the duration of real capital loss.

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