How Can Retirees Gauge Their Risk of Running out of Money
By: Michael Carbone, CFA, CFP®
How much income will you need off your investment portfolio? Will your money last? These are difficult questions to answer because the future is unpredictable. I believe financial planning is both a science and an art. The science component being a deep understanding of the time value of money and statistics. The art component being how well you understand your assumptions. For example, do you know what you are really spending? In our experience, most people underestimate their spending needs – many by a shocking amount. Also, we’ve found spending needs evolve over time. Although retirement planning with precision is an intricate process, there are ways to gauge your overall readiness.