How Real Retirement Spending Patterns Change Traditional Retirement Withdrawal Strategies
& Rethinking Monte Carlo Results for Better Client Conversations
Dr. Derek Tharp
In his presentation he examines how real retirement spending patterns change traditional retirement withdrawal strategies. Specifically, commonly used retirement spending assumptions are compared to actual retirement spending patterns of retirees. This comparison reveals that typical assumptions of constant real spending often overstates retirement spending. As a result, commonly assumptions may overstate retirement savings need. Accounting for more realistic retirement spending results in higher safe withdrawal rates than prior research has typically indicated. Typical assumptions also fail to account for the potential to make adjustments in retirement that can keep a retirement spending plan on track.Derek Tharp is the Lead Researcher at Kitces.com, an Assistant Professor of Finance at the University of Southern Maine, the Founder of Conscious Capital, and a Senior Advisor to Income Lab.
The Monte Carlo analysis is a great financial planning tool, but it is not without its drawbacks. For instance, it is uni-dimensional, focusing only on the probability of success. And certainly, success is good, but the Monte Carlo does not ensure success nor does it tell a client what to do when the plan is no longer successful, which is the larger issue. Join us for this month’s webinar and learn how to adapt the Monte Carlo analysis, making it more useful and tangible for clients. Advisors will learn practical conversation tips and approaches for working with clients and begin to think about the Monte Carlo analysis in a new light.
In addition to writing at Kitces.com, Derek regularly contributes to the wealth management section of the Wall Street Journal’s Experts Blog.
His research has been published in academic journals such as Financial Planning Review, Journal of Retirement, and Journal of Personal Finance.
This meeting sponsored by:
