robert p. kreitler
Before they retire, most clients concentrate on rates of return and on how much portfolio volatility they can live with. At and near retirement, however, their objectives change. They become concerned with how to maximize the size of the check in the mail each month and ensure that those checks will continue to arrive throughout their lifetime.
Advisers need to make the same philosophical and psychological shifts to meet the changing objectives of their retiring clients. To redesign their clients' portfolios, they need to understand the tools available that may increase retirement income in ways that will not prematurely exhaust capital. The next step is to help their clients manage their total assets in ways that meet multiple retirement objectives. They can accomplish that by assigning a separate pool of financial resources to support each objective and by using the tools to create a separate investment strategy and cash-distribution strategy for each pool.
This chapter reviews some of the traditional approaches to retirement- income distribution still used today, discusses their limitations, and offers methods that can make planning retirement income a far less risky business.
As advisers consider how to help retiring clients restructure their portfolios, it's useful for them to understand that their clients may have two frequently competing objectives for using their ...