In this final of our three part series, financial planner Justin King APFS, CFP talks about how he uses cash buffer within a retirement income portfolio to help client stay the course during a market down turn.
Justin uses Timeline to illustrate how he keeps adequate cash buffer alongside the heavy allocations to equity. The goal is to avoid being forced to sell down on equities during a market downturn. This cash buffer also doubles as a great way to managing client behaviour. By assuring the client that they have ample cash to support their withdrawals during a possible market downturn, they client is far less likely to bail on the plan. Read More
Welcome to next part of our Timeline Series!
In this video Justin King APFS, CFP guides you through what Timeline really looks like, and how he uses it for his clientele. Read More
In this hilarious talk, financial planner Justin King APFS, CFP gives a glimpse into the kind of conversation he has with clients on retirement income planning. Ultimately, all successful retirement planning rests on faith in capitalism. But first, he rants about NEWS, which he describes as Negative World Events Service. Read More
Often when we talk about the Sustainable Withdrawal Rate framework we often talk about the chances of a client running out of money, this how we usually define 'Success Rate'.
We talk and think about the number/ percentage of scenarios in which the client doesn't run out of money, i.e. the client ends up with a balance of £1 or more in their portfolio. What if we changed that? Read More
Retirement planning is in some respects similar to preparing for battle. While in retirement planning, lives may not be in danger, both do have in common the goal of seeking to maintain independence and dignity. And in retirement the enemy isn’t military aggression, but aggressive inflation, poor sequences of returns and outliving your money.
Our previous story illustrates the problem with focusing on a single-line projection in retirement planning. The fundamental problem is that using straight-line projection creates an illusion of precision, and gives an impression that there is only one plausible outcome. In reality, the exact future outcome is unknown and unknowable. So it’s important that we consider a wide range of plausible scenarios.
In this article, we consider the reasons why straight-line-projections are woefully inadequate when illustrating sustainability of income in retirement. Read More
We are on the lookout for a consultant for Timeline, the software for illustrating sustainable withdrawal strategies in retirement income portfolios. The software is used by advisers in 7 countries including the UK and the US.
The ideal candidate currently holds a business development role within financial services. Perhaps you’re looking to ditch lifeco, platform, or asset management dullsville and move instead to a vibrant, startup-esque atmosphere where your personality isn’t tolerated – it’s celebrated. Read More
Timeline, the sustainable withdrawal rate software created by Abraham Okusanya has raised a seed funding round from a group of private investors.
Founded in April 2017 in response to the Pension Freedoms, Timeline is the sustainable withdrawal rate software used by financial planners in the UK, US and other countries. Timeline uses extensive empirical research, asset class returns, inflation and mortality data to assess how a retirement strategy might fare under various market conditions. Read More
The fundamental question we’re trying to answer in retirement planning is this: will the money outlive the people or will the people outlive the money? The problem is we simply won’t know for sure until the event has happened, by which time it’s too late to plan. Without the proverbial crystal ball, it’s impossible to come up with the perfect withdrawal strategy. The future is inherently unknown, so how do we make decisions? The answer is that we think in terms of probabilities. Read More
We spend a lot think about the risk of running out of money in retirement. But one understated risk of spending conservatively in retirement is the risk of dying with too much money!
In this video, we examine the Kitces Ratcheting Withdrawal Strategy. This strategy was first described by financial planner Michael Kitces in his 2015 article.
Kitces’s main point is that Bengen’s baseline withdrawal rule is too conservative. This is because it’s based on the worst historical sequence of return. In reality, an overwhelming majority of market scenarios would support a higher withdrawal rate.
So, Kitces proposed that a retiree starts out with the baseline withdrawal rate, but can increase their spending by 10% if the portfolio value exceeds 150% of the original value. There’s a caveat: these spending increases can only take place once every three years at most. Read More
Timeline, the sustainable withdrawal rate software, has added a new feature that allows planners to compare Monte Carlo and historical simulations for withdrawal rate strategies.
With this new feature, users can see how a given withdrawal strategy fares using Monte Carlo simulations, as well as under historical scenarios.
Abraham Okusanya, founder of Timeline said ‘while we believe that historical data over 117+ years is the most objective way to illustrate asset class behaviour, we understand that some users may want to test the withdrawal strategies based on their return expectation. So, we said knock yourself out!’ Read More
On April 30th we'll be taking Timeline, the Sustainable Withdrawal Rate software to the Retirement Income Summit 2018 in Chicago! For two days, we'll be showing off the software to over 400 advisers from across the US! Read More
Organised by the InvestmentNews magazine, the annual Retirement Income Summit is the premier retirement planning conference in the US and features a fantastic range of speakers like Michael Kitces, David Blanchett & Wade Pfau.
In a 2008 paper published in the Journal of Financial Planning titled Joint Life Expectancy and the Retirement Distribution Period, Dr David Blanchett, CFA (now Morningstar head of retirement research) and his twin brother Brian Blanchett CFA, CFP, set out a framework for determining withdrawal rates based on survival probability, rather than a fixed planning horizon.In this video, I illustrate how planners can personalise this framework to each client, using the Timelineapp! Read More
In this video, we use Timeline to illustrate the impact of scaling up/down income withdrawal from a portfolio at different phases of retirement. Read More
In this video, I use Timeline to illustrate the impact of this inflation adjustment rule proposed by Guyton on success rate and client's income, in real and nominal terms. Read More
In this video we explore a rule-based approach which caps and collars each year’s inflation adjustments. This way, retirees can avoid extreme changes to their income withdrawal, at least in a nominal sense. A cap-and-collar approach also matches the typical retirement spending pattern. Income increases in real terms but at a slower pace than inflation. Read More
So what if we adopt a withdrawal strategy where the income isn’t adjusted for inflation? This enables a meaningful comparison with level annuity but also as a withdrawal strategy in its right.
This idea of fixed or level withdrawal allows the client to spend more in the early part of retirement because the real income adjusts downwards naturally. Read More
In this video, we show how to illustrate real (inflation-adjusted) and nominal withdrawal from a portfolio under a wide range of inflationary environment. With this, we can help a client can visualise how their income is likely to change over time, depending on the withdrawal strategy adopted. Read More
We're delighted to announce a new feature on Timeline which enables planners to illustrate the benefits of scaling up/down withdrawals at different phases of retirement
The traditional assumption for sustainable withdrawal rate is that a client will spend the same amount of inflation adjusted income throughout their retirement. This assumption is not supported by cold hard data on spending pattern of retirees.
Research in the UK shows spending in retirement declines progressively in real terms. From age 65, spending typically declines progressively and is about 35% lower at age 80. Read More
In this short video, I use Timeline app to show the year-end balance under all historical scenarios since 1900, for any given withdrawal amount. We can see if and when the portfolio is exhausted under each scenario. Given the wide range of outcomes, we can also see the worst case, the 10th, 50th and 90th percentile scenarios. Read More
In this video, I illustrate the impact of changes in asset allocation, time horizon and fees have sustainable withdrawal rate. Read More