The question isn’t at what age I want to retire, it’s at what income.
Prior to retirement the account grows regularly. . . . After retirement the account eventually begins to diminish. Eventually one of two things happens. Either you die (right on schedule) with money in the bank or you run out of money before you die.
One baby boomer turns 59½ every seven seconds. The magnitude of the typical investor’s retirement liability is usually the single largest liability on his or her life balance sheet. Put differently, cash flow requirements for retirement in a capital needs analysis (CNA) tend to dwarf most other cash outflows. Many wealth managers spend 80 percent of their time planning for and managing their clients’ retirements.
To be sure, the investment management principles developed in this book are critical in meeting this client need. This chapter, however, addresses unique issues and challenges in retirement planning. The treatment here will be fairly comprehensive. Author Harold Evensky and his partner Deena Katz edited a book entitled Retirement Income Redesigned: Master Plans for Distribution that provides a more robust treatment than what is afforded here. We refer the reader to that text as one of the main references.
The approach we take, broadly speaking, is to organize the issues along two main dimensions—the accumulation phase and the distribution phase. Initially, this approach seems quite intuitive. ...