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Posted on: Saturday, January 30, 2010 at 7:29 pm
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Retirement Income Redesigned: Master Plans for Distribution: An Adviser’s Guide for Funding Boomers’ Best Years
January
30th
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Product Description
For years, financial planners have focused on helping their clients accumulate wealth for retirement. Now, as millions of those boomer clients head into retirement, there is little quality information on how to manage that wealth in retirement. Evensky and Katz, two of the nation's best-known financial planners, asked leading experts to give advisers a toolkit and roadmap to the new landscape. Included are valuable insights and practical approaches for increasing re... More >>
Posted on: Saturday, January 30, 2010 at 7:29 pm Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed.
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I found this collection of essays helpful in securing a better understanding of the implications of portfolio decumulation strategies in early retirement. The essays are written for the practitioner and hence are easier to understand than much of the recent academic literature. I will recommend this book to my CFA.
January 30th, 2010 at 8:24 pmRating: 4 / 5
Although this collection of articles is aimed at financial advisers, informed individuals who wish their own, independent, sophisticated information regarding income from investments during retirement should find this book extremely useful. The article on Monte Carlo simulations is worth the price of the book. This is by far the most valuable and informative book on retirement income I’ve found.
January 30th, 2010 at 11:15 pmRating: 5 / 5
When I retired 10 years ago I was faced with surviving on an essentially self-managed traditional IRA and Social Security. I had/have a financial planner, but have found most of the profession (except those perhaps affordable by only the very wealthy – I’ve no experience of them) almost as in the dark about the withdrawal stage as I was. I ended up doing an intensive year of self-education in order to vet the advice I was getting. Still, both I & the planner made some mistakes, but the IRA survived both the 2000 tech crash & the current one relatively intact.
Things have gotten a little better in the profession, but still, after a recent round of study prompted by the fact that I’m facing the dreaded RMDs in 2011, I’ve still got the impression that the financial planning & advice profession is just beginning to really get their heads around the withdrawal stage problems looming for the Boomers and almost-boomers like me, in view of the fact that many if not most of us are not going to have the luxury of using our IRAs as 3rd tier discretionary income, but for half or more of basic income.
And one of the areas I’ve found the literature most deficient if not clueless is the problem of RMDs for those of us heavily relying on an IRA.
The problem is, RMDs, if you take the inverse of the IRS’s divisors, actually represent an unsafe withdrawal rate within about 4 years (>4%), and then escalate as if under an increasing rate of inflation. (Of course, DUH, the IRS wants you to go broke according to their one size fits all schedule, regardless of what your health, gender and genes are).
What that does to people like me who are taking out a safe withdrawal of less than 4%, is we are forced to take a taxable income stream in excess of what we currently need (in my case almost double what I need), which will result in more of your Social Security being taxable, a bite of the excess if you invest it (at your marginal tax rate), and possible exhaustion of your funds sooner than you thought under the “safe withdrawal rate” scenario for the life of the portfolio (ignoring the RMD effect).
And the literature totally ignores this problem, specifically How do we manage that excess cash flow in a tax efficient manner to conserve as much of it as we can until we DO need it? Because all the studies and advice are of safe withdrawal rates and ignore what the RMD’s can do to you by exceeding the “safe rates” and possible forcing you to take out more than you planned on, along with the tax consequences of the excess and how to manage it.
This book still doesn’t address the potential RMD problem, although the chapter on RMDs does mention “forced withdrawals” in passing (if you’re paying attention, it can alert you). (The RMD chapter is good; I’d supplement it with Nolo Press “Taking Your Money Out” book, get the latest edition.)
Other than that, I found the material in this book enormously helpful and rate it among the best I’ve found so far. If you are self-managing your retirement funds, even with an advisor, this is a good book to study, and maybe get your advisor to read it too. Good solid stuff with a refreshing absence of the sort of hype and self-serving nonsense you find in too much of the “retirement planning” literature.
January 31st, 2010 at 1:20 amRating: 5 / 5
I have been reading retirement and investment books extensively over the past 2 years (Graham, Gibson, Slott, Stein etc.) and while some have touched on saving for retirement, few have touched on withdrawal strategy. In this book, Harold has gone to great length to spell out the retiree’s psychological and economic needs, and offers up excellent options to address both. That section, plus the other fine chapters by other authors, make this a must-have book for the enlightened counselor.
January 31st, 2010 at 1:56 amRating: 5 / 5
The book is a series of articles by different authors. It is only appropriate for professionals or trained amateurs in the field. Quality is uneven. The best is the editors one article which is worth the price of the collection.
January 31st, 2010 at 3:59 amRating: 3 / 5