Welcome to Carson Group’s and PIMCO‘s Retirement Income Series. In today’s episode, retirement expert and The American College of Financial Services Wealth Management Professor Michael Finke shares an economist’s perspective on retirement income planning.

In addition to his role in the classroom, Michael also serves as Director for the Granum Center for Financial Security and the Frank M. Engle Distinguished Chair in Economic Security at The American College. He is focused on advancing knowledge in the emerging field of retirement income planning and preparing the next generation of practitioners to think more broadly about this topic.

An economist by training, when Michael moved into financial planning, he felt the traditional approach to retirement income planning was incomplete.

“We sacrifice during our working years to preserve money to live better in retirement. Then we get to retirement and there is a mental barrier to spending. That’s a problem,” he says. “We have a system dedicated to living better in retirement, and it’s not working.”

In today’s episode, Michael speaks to Jamie and Devin Ekberg, a senior consultant and education advisor with PIMCO, about the importance of being deliberate about how much of our wealth we want to spend in retirement and how much we want to pass on, the need to break long-held habits of thrift to enjoy retirement, the important role of annuities to avoid outliving savings, the problem with the bucket strategy and more.

Key Takeaways

  • How do we set up a plan that will make people happiest in retirement? That’s what advisors should be working toward, not establishing a plan that will sustain the largest portfolio.
  • If you don’t know how long your savings will last to fund a lifestyle in retirement, the tendency will be to spend as little as possible. This is not the goal of retirement income planning.
  • The insurance industry has not done a good enough job of explaining how longevity protection insurance products such as annuities can mitigate the risk of outliving savings.

Quote 

“Within the next 10 years, I want to see decumulation become just as important as accumulation and people defaulted into a solution in retirement that allows them to spend more of the money they have saved.” – Michael Finke

Links

Carson Group is committed to advancing financial literacy. Schedule a consultation to learn how Carson can help you help your clients and grow your business. Visit PIMCO to learn more about the work it is doing in the retirement income planning space.

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