05.23.2023 - Retirement Income
Redefining the Optimal retirement Income Strategy
Presented by David Blanchett, PGIM
Retirement is seldom as simple as assumed in research and financial planning tools. This presentation from David Blanchett reviewed a cohesive series of models designed to improve retirement income projections that incorporate spending flexibility implemented with a dynamic spending where optimal strategies are determined using an expected utility model based on prospect theory. This framework can result in guidance that is significantly different than models using basic assumptions, especially approaches relying on probability of success-related metrics.
Attendees Comments:
A few comments from listeners:
David really helped crystallize how to communicate these concepts with Clients, and simplified the computations for me as an advisor. With the markets being so uncertain now, it adds a new way to help clients understand how they are actually managing volatility with the use of this approach, without damaging their lifestyles. Thanks!!
- Marjorie D.
Appreciate David's approach and will look at spending differently especially for clients with less "pension income" and smaller portfolios.
- Marian J.
Monte Carlo is not about a success rate, it's about how close are you to covering needs. A 96% success rate is meaningless if you can cover 100% of your needs and even the bulk of your wants. Retirees make adjustments as needed on discretionary spending. Monte Carlo isn't the problem. Advisor models are built wrong. We're not planning for one goal: retirement but a multitude of goals. If "guaranteed" income like pensions, SS and annuities cover client's needs, then wants can be variable thru investments.
- Stephanie G.
Really appreciated the perspective and critical thinking that went into the presenter's paper.
- David W.
David really helped crystallize how to communicate these concepts with Clients, and simplified the computations for me as an advisor. With the markets being so uncertain now, it adds a new way to help clients understand how they are actually managing volatility with the use of this approach, without damaging their lifestyles. Thanks!!
- Marjorie D.
Appreciate David's approach and will look at spending differently especially for clients with less "pension income" and smaller portfolios.
- Marian J.
Monte Carlo is not about a success rate, it's about how close are you to covering needs. A 96% success rate is meaningless if you can cover 100% of your needs and even the bulk of your wants. Retirees make adjustments as needed on discretionary spending. Monte Carlo isn't the problem. Advisor models are built wrong. We're not planning for one goal: retirement but a multitude of goals. If "guaranteed" income like pensions, SS and annuities cover client's needs, then wants can be variable thru investments.
- Stephanie G.
Really appreciated the perspective and critical thinking that went into the presenter's paper.
- David W.
David really helped crystallize how to communicate these concepts with Clients, and simplified the computations for me as an advisor. With the markets being so uncertain now, it adds a new way to help clients understand how they are actually managing volatility with the use of this approach, without damaging their lifestyles. Thanks!!
- Marjorie D.
Appreciate David's approach and will look at spending differently especially for clients with less "pension income" and smaller portfolios.
- Marian J.
Monte Carlo is not about a success rate, it's about how close are you to covering needs. A 96% success rate is meaningless if you can cover 100% of your needs and even the bulk of your wants. Retirees make adjustments as needed on discretionary spending. Monte Carlo isn't the problem. Advisor models are built wrong. We're not planning for one goal: retirement but a multitude of goals. If "guaranteed" income like pensions, SS and annuities cover client's needs, then wants can be variable thru investments.
- Stephanie G.
Really appreciated the perspective and critical thinking that went into the presenter's paper.
- David W.