What seemed like an informative strategy session became a frustrating slog into financial uncertainty. These women shouldn’t feel like they are being punished for successfully saving wealth. What happens to Abigail’s income if there is significant inflation?.Are we projecting income before tax or after-tax?. Is 4.5 percent the right amount of systematic withdrawal to take?.Should Beth and Camila lower their weighting of equities during the initial years of their retirement?.Should they wait until full retirement age to file for Social Security?.To complete the retirement plan, there are questions that need to be answered, such as: The complex process of retirement income planning can potentially leave all three pre-retirees more confused than comforted. A challenge is that when these women seek professional help, the solutions offered by retirement advisors might quickly devolve into spreadsheets and simulators, assumptions and alternatives. Should they come up with a number that reflects what they need to draw down in order to meet their standard of living goals, or is the question really how much they can afford as a drawdown?Īll three financial styles can be accommodated, but the methods used for retirement income drawdown must be individualized. These women are financially comfortable, but they are not wealthy. This begs the question of how they should look at their prospects for a retirement income. Part of that capital is Social Security, and the other part is a pile of money in a 401(k) account. These three individuals are soon to embark on a perilous journey where their human capital - their jobs - are going away, and they must solely rely on their retirement capital. Should their drawdown strategy target what they need or what they can afford? Markets have been so volatile, especially recently, and she worries she may be too old to take on risk. She shares Beth’s attitude about working with whatever she can afford as income, but she is concerned about the wisdom of having her retirement capital in the stock market.
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