I was pleasantly surprised to see myself mentioned for contributions in an article in May’s edition of Financial Planning magazine on the topic of distribution planning. It has been my opinion that many advisors overestimate the degree to which expenses will continually increase throughout retirement and that advisors and consumers alike generally do a poor job of modeling expenses throughout retirement. This causes the advice as to whether or not one can afford to retire to be skewed towards having to work longer or to skew spending lower than it needs to be. Both outcomes are generally undesirable.
It was interesting to note that the methodology we utilize to project expenses for our clients throughout retirement is very much like a sophisticated model recently created by and written about by California Lutheran University Professor Somnath Basu, which has received much praise for its improved modeling of one’s expenses as they age. Professor Basu and I came to these conclusions via our own independent thought and both made these conclusions drawing upon some of the same research previously conducted. He can take the praise. I’ll be happy knowing we’re taking good care of our clients. You can read the article in full by clicking here.
– Kevin Kroskey, CFP, MBA
