For Married Couples, Social Security is a Team Sport

Retirement advisors emphasize that Social Security decisions are among the most important decisions to make.  Most encourage individuals to wait until age 70 if possible, to maximize the payout, or to at least wait until full retirement age (FRA, ~67), but for sure avoid starting payments when first eligible (age 62) or shortly thereafter.  The exceptions they typically cite include …

You’re Portfolio is Not as Diversified as You Think

Financial investments are based on future expectations regarding returns and risks.  Historical data provides guidelines for estimating both.  While expected returns often are then adjusted up or down based on contemporaneous information not captured by past data, the measures of risk invariably rely on historical data and vary primarily due to the time horizon used in the calculation.  The risk …

Comparing Countries on Perceptions of Financing Retirement

”The country’s (retirement) system (will) drop steadily to zero by 2035.” “The decline and eventual deficit concerns are being fuelled by a rapidly ageing population and shrinking workforce, with the gap between the number of workers who contribute to the pension fund and the number of retirees who receive benefits from it gradually getting smaller.” ““Young people don’t have as …

Present Value of a Growing Stream of Future Cashflows

At its core, retirement planning is about connecting present to future cashflows, where those cashflows might reflect your minimal annual needs, your more aspirational annual wants, or your anticipated annual funds from one or more sources.  Standard practice in finance is to discount future cashflows back to the present by applying a discount rate.  Spreadsheets are helpful in such calculations, …

Quantifying Your Subjective Beliefs

In what year do you think the first U.S. Social Security check was issued? Two people are asked this question, neither knows the answer with certainty, so they separately are guided through a process to represent both their best guess and degree of uncertainty, resulting in the two probability distribution curves below, dating back to 1776. Which person did “better”? …

Emerging Risks in a World Beyond Covid-19

The year 2020 will forever be linked to a pandemic, a known global risk that most years manage to avoid. Such hazards sometimes lead to cascading risks traceable back to its root cause. Already, the virus has led to major disruptions of economies, massive unemployment, and reduced levels of international trade (particularly regarding medical supplies). What other risk exposures lurk …

Own and Run Your Retirement: A Sports Team Analogy

Retirement planning, financing and execution is complicated.  There is the seemingly simple but nonetheless elusive matter of recognizing the need, allocating the time, and collecting the relevant information.  There is the challenge of creating and projecting personal or family financial statements, anticipating retirement dates, and adjusting future funds for inflation and the time value of money.  There are somewhat measurable …