Retirement Sustainability

How likely is it--at your desired spending rate--that your retirement savings will last the remaining years of your life? Retirement sustainability is a calculation that provides an indication of your retirement readiness, and the result informs you of saving and spending adjustments that may be necessary. Retirement sustainability is based on a number of factors such as: how many streams of income you have to support your retirement; your asset allocation nearing and during retirement; your withdrawal rate, and; your longevity risk, which is the risk that you’ll outlive your money during retirement. The calculation differs from firm to firm but is best used as an indicator of whether retirement income adjustments need to be made--be it in asset allocation, diversification, savings or spending rates.

Retirement Planning Options

What options are available to a soon-to-be retired household that is financially constrained?  What levers can be pulled if desired retirement spending is not realistic in light of retirement savings?

The financial profile we developed in related articles offers a case study of a financially constrained household.
What options are available to a soon-to-be retired household that is financially constrained?  What levers can be pulled if desired retirement spending is not realistic in light...
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What the Average American Retiree Can Afford to Spend

Previous articles in this series discussed the financial profile of William--the head of the typical American household that is approaching retirement.
 
We concluded that it is very unlikely that William will be able to sustain a retirement spending rate that is based on 85 percent of his pre-retirement...

The Odds of a Successful Retirement

The odds of financial success in retirement for the typical American household are less than ten percent.

This is based on the financial profile of an American household that would be considered statistically average.  We developed the financial profile of an average American retiree in a previous article (click here to read).  

The summary of the financial profile of our hypothetical retiree--referred to as William--is as follows:

  • William needs to generate $40,038 per year in after tax
  • ...

Will You be Able to Retire?

Roughly 10,000 Americans will retire each day for the next nineteen years.  Many millions of these retirees will have financial profiles that are considered statistically average.  

What, exactly, does it mean to be financially average, and what might retirement look like for the average person or household?  How might the financial aspects of retirement play-out for you, your parents, or your family and friends?  

Let’s take a look at some data sources to consider the average profile and how it may apply to your situation.  For simplicity, I’ll give the average American retiree a name – I’ll call him William.

Who is William?

Let’s lend some definition to William by building a...

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