To get things started, let me provide an update on some recent columns I've written at different places around the Internet, as well as a note about a webinar I will participate in on Thursday.
Now is a Tough Time to Retire
In the column, "Now is a Tough Time to Retire," at Financial Advisor magazine, I write about a question I am commonly asked, which is whether it is a bad time to purchase an income annuity or buy individual bonds because interest rates are low. My answer is: not necessarily, relatively speaking. More generally, it's a tough time to retire as everything is expensive. Income annuities are not necessarily worse position than other approaches in our low interest rate and high market valuation world.
The Power and Limitations of Monte Carlo Simulations
David Blanchett and I have written a two-part series about Monte Carlo simulations for financial planning (and a third part is on the way) at Advisor Perspectives. The first article, "The Power and Limitations of Monte Carlo Simulations" provides a discussion about how Monte Carlo simulations are used in financial planning software. We consider some common critiques about Monte Carlo, and whether these critiques are justified. We also highlight important advantages obtained from a Monte Carlo approach relative to other straightline types of methods.
Can Retirees Still Use a 4% Withdrawal Rate? Practical Applications of Monte Carlo Analysis
The second part in this series from David and I is called, "Can Retirees Still Use a 4% Withdrawal Rate? Practical Applications of Monte Carlo Analysis." It provides a discussion of different issues and applications related to using Monte Carlo for retirement planning analysis. We conclude that Monte Carlo provides a more flexible tool for retirement income planning than looking at what would have worked in rolling periods from the historical data.
Is the 4 Percent Rule Too Low or Too High?
The topic of the column, "Is the 4 Percent Rule Too Low or Too High?" from the Journal of Financial Planning should be somewhat familiar to readers here, as I've discussed it before. But this column represents my attempt to summarize and distill some key issues into a short column. I've re-written lots of portions from past discussions at the blog.
Mr. Money Mustache
I would be remiss not to mention that one of my favorite bloggers, Mr. Money Mustache, actually included a research question for me to explore in a recent blog post. It's actually a really good question, and I've got it on my to-do list. The issue is that because of the equity risk premium, generally if one is given a choice in the matter, it will be better to invest the full lump-sum amount all at once, rather than dollar cost averaging the wealth into the markets over time. This maximizes the amount of time that the wealth is exposed to the market. Mr. Money Mustache ponders whether this will continue to hold even when market valuations are at historically high levels, such as today. I'll plan to take a look at this.
Saving for Retirement: Am I On Track?
Regarding the webinar, Paula Friedman and I will do a joint presentation called, "Saving for Retirement: Am I On Track?" It's actually a very introductory presentation for people just getting started with investing and saving. Paula is director of encore401(k) at McLean Asset Management, and she will discuss some of the basics around saving and investing which she also shares with plan participants in 401(k) plans. I'll join in to discuss "safe savings rates," as a way to approach the retirement planning problem from the perspective of someone who does not wish to spend a lot of time thinking about finance and investments. Given some basic information about your situation, the idea of safe savings rates is to let you know how much you should be saving to have a good shot at achieving your retirement spending goals.
To register for this event, please go to:
Registration URL: https://attendee.gotowebinar.
Webinar ID: 128-747-283