The Actuarial Approach–Better Than The 4% Rule, Simpler Than Monte Carlo Modeling and More Effective Than Either

Looking to keep your spending on track and consistent with your
spending goals in retirement? Forget the 4% Rule and complicated Monte
Carlo simulations. Use the same basic approach/process that actuaries
use for Social Security and pension plans. The Actuarial Approach involves:Periodically
(we recommend annually) comparing the present value of your assets with
the present value of your spending liabilities to determine your Funded
Status.Taking appropriate actions when your Funded Status falls outside reasonable guardrails.That’s
it! And you can use one of our free Actuarial Financial Planners to
perform the present value calculations. As discussed in our previous post, this process does involve annually entering your granular spending
budget items and your sources of income as well as expected future
increase rates for these items. But, we believe the effort you put into
this annual process will be worth it.