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Getting Retirement Right

Carly Schulaka, who edited the special section on retirement in this issue of the Journal of Financial Planning, recently attended one of those much-hyped retirement “summits.” Her report was not encouraging. Many attendees seemed intent on finding a “silver bullet”—a single product to solve a majority of clients’ retirement income needs. And most of the conference presentations had more to say about investment than retirement.

Perhaps it’s understandable—even inevitable—that we look for simple answers and allow investing and retirement planning to get all tangled up. But in this issue of the Journal, we tried hard not to make the same mistakes.

To start with, we consulted some of the brightest retirement planning minds around. We enlisted a micro-advisory board to help us revamp FPA’s annual retirement survey questionnaire. Participants included planner/researcher/educator Dave Yeske; safe-withdrawal-rate pioneers Bill Bengen and Jon Guyton; actuary/financial planner/writer Joe Tomlinson; planner and author Jason Branning; and Betty Meredith and Kevin Seibert of the International Foundation for Retirement Education (InFRE).

In addition, Guyton generously offers his thoughts and analysis on some of the survey results, poring over findings from 2008 through 2011 to look for trends and offer practical strategies for creating more successful retirement income plans.

Leading financial and research expert Mathew Greenwald writes that advisers must adopt new strategies to help preserve Americans’ financial security in retirement. His article offers “3 Ideas for Preserving the Financial Security of New Retirees.”

Cheryl Krueger, founder of Growing Fortunes Financial Partners, and a Fellow of the Society of Actuaries, also examines findings of the 2011 FPA retirement income planning survey. Data indicate that advisers plan for an average age of 91.7 for men and 94 for women. Krueger’s article asks, “Mortality Assumptions: Are Planners Getting It Right?” She believes life expectancy provides useful guidance for selecting a planning age, but it’s not an effective substitute.

InFre’s Betty Meredith, noted above, does double duty in this issue, writing a column that expresses the need for more concrete retirement income planning standards for mid-market Americans. She notes the grim realities identified in a Government Accountability Office report:

  • Individuals over age 65 are depending on employment income for almost one-third of their income.
  • People are choosing not to delay Social Security, even though doing so is one of the most common recommendations financial professionals make.
  • People over age 60 are decreasing their exposure to equities in their retirement portfolios. They’re trading future inflation and longevity protection for principal protection today.

And what would the aforementioned Bill Bengen have to say about retirement planning today? Is he standing pat on his idea of a safe portfolio withdrawal rate? What general advice is he giving clients in this economy? We ask him, and his answers make for interesting reading in this month’s “10 Questions” interview.

In summarizing this issue, we turned to the people you regard as expert sources on retirement planning. Did we get it right? As always, you be the judge.

Lance Ritchlin

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