Retirement Realities

• Longer life expectancies, future inflation rates and retirement spending habits must be accounted for in distribution plan modeling.
• While historic average returns may be a valuable starting point for modeling in the accumulation phase, distribution modeling is complicated by cash outflows.
• The central concern in the distribution phase is shortfall risk, or outliving one’s assets, so investors and advisers must develop a sound distribution strategy.
• The new math of the distribution phase emphasizes the importance of downside risk management and the sequence of investment returns – particularly in the initial years of withdrawals.
• Standard deviations and calendar-year returns are incomplete measures of downside resilience.
• Both qualitative and quantitative analysis is needed in order to gain insight into the character of an investment manager.
• True risk controls are a byproduct of company philosophy and process.

James Hemenway
CRPC®
First Vice President, Investments
Investment Management Consultant

157 S. Kalamazoo Mall
Suite 400
Kalamazoo, MI 49007
Phone: 269-349-7744
Fax: 269-385-2858
Toll-Free: 800-842-0099
Direct: 269-337-5516
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