Back to notes
What tool is commonly used to estimate the likelihood of running out of funds in retirement?
Press to flip
Monte Carlo simulations.
What is the potential risk associated with traditional methods of retirement planning?
The potential risk of fund depletion.
What scenario is illustrated by the modern annuity for individuals who 'live too long'?
Income continues for as long as the budget adherence is maintained.
What are the two components of a modern annuity?
Account value (standard investment account) and optional budget (guaranteed income stream).
What is the primary focus during the accumulation phase of retirement savings?
Maximizing retirement account funds through high returns and minimizing fees and market losses.
What is the classical withdrawal rate recommended by advisors during retirement?
3%-4% annually, following the 4% rule.
What happens to the funds in a modern annuity if a person dies early or has a terminal illness?
Remaining funds go to beneficiaries.
What factors should a personalized retirement plan consider to be effective?
Individual financial goals, risk tolerance, and the balance of income needs over time.
Who are the key professionals involved in the accumulation phase of retirement savings?
Financial advisors, planners, wealth managers, and investment advisors.
How does the focus of retirement planning change in the distribution phase?
The focus shifts to maximizing bank account deposits and ensuring funds last throughout retirement.
How do traditional and modern retirement strategies differ regarding fund accessibility and security?
Traditional methods may lead to depletion, whereas modern strategies provide flexibility and continued income.
What aspect of modern strategies allows for higher withdrawal rates in retirement planning?
Modern strategies involve higher withdrawal rates with minimal risk of running out.
How does a modern annuity differ from traditional annuities in retirement planning?
It provides a steady income with flexibility and access to funds, even if the account balance depletes.
Why is it important to secure a guaranteed income during retirement?
To ensure a steady income without the risk of depletion and meet individual financial goals.
How does the increasing income option in retirement planning work?
It starts with a lower income, increasing over time based on account performance to balance initial income needs.
Previous
Next