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Retirement Planning

"Everyone has a plan until they've been hit" — Joe Louis

Many people don’t realize that the baby boomer generation is the first demographic to retire in such large numbers at the same time. They could live in retirement for 30 or more years, almost as long as they have worked. For this reason and because of historically low interest rates, income planning for boomers has changed considerably from prior generations.

As earlier generations prepared to retire, they traditionally increased the percentage of bonds in their portfolio and expected to live off of the interest. Based on my learning at the Wharton Retirement Planning Program 1, I have developed a retirement income model that addresses the new realities. Today the goal for successful retirement is building sustainable layers of income from a variety of investment types. I call this the retirement pyramid.

My planning software lets me easily and interactively change key parameters such as retirement age, living expenses, when you begin collecting your social security, longevity, etc. By being able to model various scenarios, you can see the impact of different lifestyle decisions and begin to build confidence about which ones best suit your financial goals.

Client Centered

The process of building a retirement pyramid is to match different types of expenses to different sources of income. As you go up the pyramid, expenses become more discretionary and therefore you can take on more risk in meeting their funding requirements. So at the bottom of the triangle might be a mortgage payment met by annuity or pension income. In the middle might be the purchase of a new car which can vary in cost from a new high-end Mercedes to a more frugal Hyundai. Paying for the car might come from bond income or blue chip stocks. At the top of the pyramid might be a vacation in Tahiti funded by a high-risk, high-reward stock fund an only in years that the market is doing very well. Back >>

1 Retirement Planning Specialist title awarded by Equitable Advisors, based upon receipt of a Certificate in Retirement Planning from The Wharton School, University of Pennsylvania.