Description
While retirement-income guardrails offer a convenient and easy-to-understand framework for advisors to explain when a client would need to make portfolio adjustments to facilitate spending during retirement, certain guardrail models come with major limitations. For example, withdrawal-rate guardrails are a commonly used framework, but they do not always accurately reflect a client’s dynamic income sources and actual spending behaviors. Risk-based retirement-income guardrails, on the other hand, have the benefits of communication and clarity, while modeling a client’s retirement income sources and spending patterns more realistically. Please join Derek Tharp, Ph.D., CFP(R), CLU(R), RICP(R) and lead researcher at Kitces.com to learn more about risk-based guardrails and the impacts of the varying associated parameters using several examples and practical considerations for implementation.
Learning Objectives
- LO #1: Define the retirement-income guardrail approach and its advantages.
-LO #2: Examine the major limitations of withdrawal-rate guardrails.
- LO #3: Understand how risk-based retirement-income guardrails overcome limitations of withdrawal-rate guardrails.
- LO #4: Examine the impact of different risk-based guardrail parameters.
- LO #5: Identify practical considerations of using risk-based guardrail parameters.