Retirement Income Redesigned E-Book

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Bloomberg Professional
• Sprache: Englisch

Seitenzahl: 578

Veröffentlichungsjahr: 2010

Beschreibung

Clients nearing retirement have some significant challenges to face. And so do their advisers. They can expect to live far longer after they retire. And the problems they expect their advisers to solve are far more complex. The traditional sources of retirement income may be shriveling, but boomers don't intend to downsize their plans. Instead, they're redefining what it means to be retired--as well as what they require of financial advisers. Planners who aren't prepared will be left behind. Those who are will step up to some lucrative and challenging work. To help get the work done, Harold Evensky and Deena Katz--both veteran problem solvers--have tapped the talents of a range of experts whose breakthrough thinking offers solutions to even the thorniest issues in retirement-income planning: * Sustainable withdrawals * Longevity risk * Eliminating luck as a factor in planning * Immediate annuities, reverse mortgages, and viatical and life settlements * Strategies for increasing retirement cash flow In Retirement Income Redesigned, the most-respected names in the industry discuss these issues and a range of others.

Leseprobe

Table of Contents

Praise

ALSO AVAILABLE FROM BLOOMBERG PRESS

Title Page

Copyright Page

Dedication

Acknowledgements

ABOUT THE CONTRIBUTORS

Foreword

PART ONE - FACING THE NEW REALITIES

CHAPTER 1 - Boomers A Force for Change

Boomer Retirement: The Times Are Changin’

New Realities: Retirement Is Bad for You

A Value Shift

The Decumulation Phase in Retirement Planning

Retooling Your Practice

CHAPTER 2 - Maslow Meets Retirement

Income for Life

Organizing the Maslow Conversation

CHAPTER 3 - Decision Making at Retirement

The Cycle of Decision Making

Decision Making and Context

CHAPTER 4 - Reinventing Retirement

Whatever Happened to the Golden Years?

Removing “Tired” from Retired

Financing the Rewired Life

The New Retirementality

PART TWO - ASSESSING THE RISKS

CHAPTER 5 - Psychological Impediments to Retirement-Income Planning

The Risks of Retirement

Failing to Plan Effectively for Old Age

Helping the Next Generation to Retire

CHAPTER 6 - Lifelong Retirement Income How to Quantify and Eliminate Luck

A Balancing Act: Assets and Cash Flow

The Successful Distribution Portfolio

Cyclical Trends

Asset-Allocation Strategies

Cash Flow Strategies

Ensuring Lifelong Income

CHAPTER 7 - Balancing Mortality and Modeling Risk

Shifting the Risk

Uncharted Territory: A Safe Withdrawal Rate

CHAPTER 8 - Monte Carlo Mania

Monte Carlo—Good? Bad? Good Enough?

The Average-Return Problem

The Problem With Monte Carlo

Stress Testing: More Effective Than Monte Carlo

CHAPTER 9 - Understanding Required Minimum Distributions

The Rules and How They Apply

PART THREE - SHAPING THE SOLUTIONS

CHAPTER 10 - Risk Management During Retirement

Threats to Retirement Income

Will the Money Run Out?

The Role of Downside Protection

The Essentials

CHAPTER 11 - Withdrawal Strategies A Cash Flow Solution

Cash Flow Strategy: Clearing the Hurdles

Myths and Nonsense

Evensky & Katz Cash Flow Reserve Strategy

CHAPTER 12 - Asset Allocation The Long View

The Retirement-Income Problem

Managing the Risk of Equities

Addressing Risk in Retirement-Income Planning

CHAPTER 13 - Sustainable Withdrawals

Outliving a Portfolio

The Maximum Safe Withdrawal Rate

Raising Safemax Through Asset Selection

Raising Safemax Through Alternative Withdrawal Schemes

Raising Safemax Through Investment Returns

Bequests

Equity Allocations During Retirement

Advising Clients on Sustainable Withdrawals

CHAPTER 14 - Tools and Pools Strategies for Increasing Retirement Cash Flow

Conflicts and Hazards

Tools

Managing Cash Flow

Creating an Investment Strategy

A Trial Portfolio

CHAPTER 15 - Creating Portfolios With Lower Volatility

The Best of Both Worlds

Navigating the Pitfalls of Overvalued Markets

Viable Alternatives

Designing a Lower-Volatility Portfolio

CHAPTER 16 - Reverse Mortgages in Distribution Planning

The Reverse Mortgage: A Viable Option?

Checking for Fit

CHAPTER 17 - Life Insurance Benefits—No Waiting

Stuff Happens

How the Market Works

Suitable for Sale

Preventing Lapses

Facing Controversy

CHAPTER 18 - Longevity Risk Insurance

Lasting a Lifetime

Sources of Retirement Income

Types of Payout Annuities

Investors’ Choices

CHAPTER 19 - Immediate Annuities Structure, Mechanics, and Value

Structure

The Right Fit

Income Taxation

Comparing the Choices

Assessing Value

CHAPTER 20 - The Search for Software

The Tech-Averse Adviser

The Retirement-Distribution Challenge

INDEX

ABOUT BLOOMBERG

Praise for

RETIREMENT INCOME REDESIGNED

Master Plans for Distribution

EDITED BY Harold Evensky and Deena B. Katz

“Expert advice for retirement planning is essential but too often flaky. Nothing in this book is flaky. The expert authors are sophisticated and knowledgeable. Their presentations are rock-solid, comprehensive, and clear. They cover every important aspect of the retirement problem. Any adviser or client who reads this book will be deeply grateful to Harold Evensky and Deena Katz for putting it together.”

PETER L. BERNSTEIN Author, Against the Gods: The Remarkable Story of Risk

“Once again, Harold and Deena have succeeded in putting together an A-team of financial experts. The end goal for this team is to help other financial professionals do the best possible job that they can as they guide their clients in their retirement years. This book is a must-have for anyone advising clients through retirement.”

J. THOMAS BRADLEY JR. President, TD AMERITRADE Institutional

“Advisers have an unprecedented opportunity to work with a generation that has shaped history and will reshape the future of retirement planning. Retirement Income Redesigned provides advisers with a valuable tool for understanding and addressing the unique needs of retiring baby boomers.”

JOHN IACHELLO Chief Operating Officer, Pershing Advisor Solutions A service of Pershing LLC, a member of BNY Securities Group and a subsidiary of The Bank of New York Company, Inc.

“With 80 million baby boomers entering retirement over the coming decades, Retirement Income Redesigned is a must-read for financial advisers who are determined to grow their business and add value for clients. The book provides a valuable mix of conceptual planning principles, product guidance, and tangible planning ‘how to’s’ to help advisers meet the needs of their in-and-near-retirement clients. It’s a wonderful tool for gaining insights and ideas to maximize your firm’s potential in attracting this valuable segment.”

DEBORAH MCWHINNEY Former President, Schwab Institutional

Praise for

THE INVESTMENT THINK TANK

Theory, Strategy, and Practice for Advisers

EDITED BY Harold Evensky and Deena B. Katz

“All serious practitioners should take the time to readThe Investment Think Tank. Harold Evensky and Deena Katz have done it again with a book covering topics important to our industry and critical to our clients’ financial success.”

CHARLIE HAINES, MBA, CFP President and CEO, Charles D. Haines, LLC

“It’s rare when pragmatism joins forces with pure science, but I expected no less from this team. Harold Evensky and Deena Katz—masters of theory and practice in financial planning—rounded up a winner’s circle of investment pros. There’s something here for even the most seasoned in the business. And if you’re new at the game, pay close attention.”

JESSICA M. BIBLIOWICZ Chairman, President and CEO, National Financial Partners

“Given the pressures, demands, and challenges of everyday business, financial advisers can gravitate to formulaic solutions to financial planning. The panoply of issues addressed by a host of financial professionals in The Investment Think Tank should encourage advisers to consider the pitfalls in seeking panaceas, to better understand the vast variety of issues involved with constructing a financial plan, and to appreciate the fiduciary importance of understanding an individual investor’s needs, objectives, and psychological concerns in the design process.”

THOMAS A. JAMES Chairman and CEO, Raymond James Financial, Inc.

ALSO AVAILABLE FROM BLOOMBERG PRESS

The Investment Think Tank:Theory, Strategy, and Practice for Advisers edited by Harold Evensky and Deena B. Katz

Family Wealth—Keeping It in the Family:How Family Members and Their Advisers Preserve Human,Intellectual, and Financial Assets for Generations by James E. Hughes Jr.

Managing Concentrated Stock Wealth:An Adviser’s Guide to Building Customized Solutions by Tim Kochis

The PPLI Solution: Delivering Wealth Accumulation,Tax Efficiency, and Asset Protection ThroughPrivate-Placement Life Insurance edited by Kirk Loury

Bonds:The Unbeaten Path to Secure Investment Growth by Hildy Richelson and Stan Richelson

Tax-Aware Investment Management:The Essential Guide by Douglas S. Rogers, CFA

Wall Street Secrets for Tax-Efficient Investing:From Tax Pain to Investment Gain by Robert N. Gordon with Jan M. Rosen

A complete list of our titles is available at

www.bloomberg.com/books

Attention Corporations

This book is available for bulk purchase at special discount. Special editions or chapter reprints can also be customized to specifications. For information, please e-mail Bloomberg Press, [email protected], Attention: Director of Special Markets, or phone [phone].

© 2006 by Harold Evensky and Deena B. Katz. All rights reserved. Protected under the Berne Convention. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher except in the case of brief quotations embodied in critical articles and reviews. For information, please write: Permissions Department, Bloomberg Press, 731 Lexington Avenue, New York, NY 10022 or send an e-mail to [email protected].

BLOOMBERG, BLOOMBERG LEGAL, BLOOMBERG MARKET ESSENTIALS, BLOOMBERG MARKETS, BLOOMBERG NEWS, BLOOMBERG PRESS, BLOOMBERG PROFESSIONAL, BLOOMBERG RADIO, BLOOMBERG TELEVISION, BLOOMBERG TERMINAL, and BLOOMBERG TRADEBOOK are trademarks and service marks of Bloomberg L.P. All rights reserved.

This publication contains the authors’ opinions and is designed to provide accurate and authoritative information. It is sold with the understanding that the authors, publisher, and Bloomberg L.P. are not engaged in rendering legal, accounting, investment-planning, or other professional advice. The reader should seek the services of a qualified professional for such advice; the authors, publisher, and Bloomberg L.P. cannot be held responsible for any loss incurred as a result of specific investments or planning decisions made by the reader.

ISBN-13: 978-1-57660-189-1

The Library of Congress has cataloged the earlier printing as follows:

Retirement income redesigned : master plans for distribution : an adviser’s guide for funding boomers’ best years / edited by Harold Evensky and Deena B. Katz; foreword by Walter Updegrave.

p. cm.

Includes bibliographical references and index.

Summary: “A how-to for financial advisers, offering practical suggestions and insights from a range of financial professionals on key issues relating to retirement income distribution planning.”

--Provided by publisher.

1. Retirees--United States--Finance, Personal. 2. Baby-boom generation--Finance, Personal.

3. Retirement income--United States--Planning. 4. Retirement--United States--Planning. 5. Saving and investment--United States. I. Title: Adviser’s guide for funding boomers’ best years. II. Evensky, Harold. III. Katz, Deena B. IV. Walter Updegrave.

HG179.R3949 2006

332.024’0145--dc22

2006002227

Acquired by Jared Kieling

Edited by Mary Ann McGuigan

We dedicate this book to the two people who made it a reality—

Mary Ann McGuigan and Martina Schramm

ACKNOWLEDGMENTS

TO OUR CONTRIBUTORS

It takes a lot of talent to develop a book such as this one, and we’ve been blessed by having the privilege of offering readers the contributions of such an extraordinary group of professionals and academics. We believe each chapter, in and of itself, is reason enough to spend the time reading.

TO OUR ASSOCIATES

The pleasure of working with such a sterling group of people as our friends and associates at Evensky & Katz and the continual support we receive from them certainly contributed to our efforts in this venture.

TO OUR PUBLISHER

For authors, Bloomberg Press is a dream come true. This is our fourth journey working with the Bloomberg team and our acquisitions editor, Jared Kieling. The experience gets better each time.

TO OUR TEAM

Last, but assuredly not least, we wish to thank (a woefully inadequate word), Mary Ann McGuigan and Martina Schramm. Mary Ann is our editor. Her skillful and professional editing magically transformed 20 thoughtful but disparate chapters into a cohesive book. Martina Schramm is our personal assistant. Without her persistence, patience, coordination and tact, our book would never have seen the light of day.

ABOUT THE CONTRIBUTORS

Anna Abaimova is a research associate at the IFID Centre in Toronto, where she is the project manager for the center’s models and data on payout annuities, longevity insurance, and retirement-risk management. She coauthored the software manual for the Retirement Income Probability Analyzer, which was developed in conjunction with the U.S.-based Society of Actuaries and profiled in the Wall Street Journal. Abaimova has a BBA in business administration from the Schulich School of Business at York University.

Roxanne Alexander, CFP, joined Evensky & Katz while finishing her MBA. She is now senior vice president, developing financial plans and investment policies for new clients, and a member of the adviser teams, addressing client issues. Before joining Evensky & Katz, Alexander was the owner and director of a real estate company in Kingston, Jamaica, specializing in locating and evaluating commercial real estate investments for multinational corporations starting operations in Jamaica. She is a member of the Financial Planning Association and the CFA Institute. Alexander received her bachelor’s degree in management and accounting from the University of the West Indies and her master’s degree in business administration with emphasis in investments and financial planning from the University of Miami.

Michael J. Anderson, JD, is a vice president of planning with Evensky & Katz and an advisory team member. In 2003, Anderson’s paper “Strategic Personal Career Planning: An Entry Point for Students of Financial Planning” was selected as the student winner of the Financial Planning Association’s Annual Call for Papers competition and was subsequently published in the FPA’s Solutions magazine. A member of the Financial Planning Association, Anderson has been quoted and published opinions in the Journal of Financial Planning,financial-planning.com, Investment News magazine, currentofferings.com, TheStreet.com, the New York Daily News, and Dermatology Business Management magazine. He received his doctor of jurisprudence and master of science in personal financial planning from Texas Tech University and his bachelor’s degree from Seattle University. Anderson served as an officer on active duty in the U.S. Army, where he held leadership positions in the 82nd Airborne Division at Fort Bragg, North Carolina. He was also an officer in the Texas National Guard.

Mitch Anthony is recognized in the financial-services industry for his work in the field of building client relationships. Financial Planning magazine named Anthony one of the “Top Movers and Shakers” in the industry in 2006. He is president of Advisor Insights and of the Financial Life Planning Institute, which are training companies serving advisers and financial-services corporations. He is the best-selling author of several books for financial professionals, including Storyselling for Financial Advisors (Dearborn, 2000), The New Retirementality (Dearborn, 2001), Your Clients for Life (Dearborn, 2002), The Financial Professional’s StoryBook (Advisor Insights Press, 2003), and Your Client’s Story (Dearborn, 2005). Anthony’s column “Financial Life Planning” appears bimonthly in Financial Advisor magazine, and he is a contributing editor for Research magazine, where his feature “Your Clients for Life” appears. His work has been featured on ABC Evening News with Peter Jennings, CNN, Bloomberg TV, CBS Market Watch, Kiplinger’s, Ticker, Registered Rep., and Investment Advisor. Anthony’s radio feature, The Daily Dose, airs daily on 160 radio stations nationwide.

William P. Bengen, CFP, is a sole practitioner in El Cajon, California. He is a fee-only personal financial adviser, specializing in helping clients grow their wealth and enjoy that wealth. Bengen’s independent research into sustainable withdrawals was published in the Journal of Financial Planning in a series of four articles beginning in 1994, and he has since been widely quoted in the media on the topic. He received a BS from the Massachusetts Institute of Technology in aeronautics and astronautics and a master’s degree from the College for Financial Planning (now NEFE). Before beginning his career as a financial adviser, Bengen served as CEO of his family’s soft-drink bottling firm in the New York area.

Laurence Booth, DBA, MBA, holds the CIT Chair in Structured Finance at the Rotman School, University of Toronto, and is the finance area coordinator there. His major research interests are domestic and international corporate finance and the behavior of regulated industries. A member of the faculty at the University of Toronto since 1978, Booth has taught graduate courses in business finance, international financial management, corporate financing, mergers and acquisitions, financial management, and financial theory, as well as short executive programs on the money and foreign exchange markets, business valuation, mergers and acquisitions, and financial strategy. He has published more than 40 articles in academic journals, as well as the widely used textbook International Business, with Alan Rugman and Don Lecraw (McGraw-Hill, 1985), and is on the editorial board of four academic journals. Booth’s advice is frequently sought by the media, and he has appeared as an expert witness before the Ontario Securities Commission, the CRTC, and the National Energy Board, as well as most of the major provincial regulatory tribunals in Canada.

Joel P. Bruckenstein, CFP, CFS, CMFC, is the country’s leading authority on applied technology and related practice-management techniques for financial advisers. He is a virtual-office consultant, freelance journalist, and book author. Bruckenstein has lectured at FPA retreats, NAPFA national conferences, NAPFA Advanced Planner Conferences, the AICPA Personal Financial Planning Conference, and other industry events. He is senior technology editor at MorningstarAdvisor.com and publisher of Virtual Office News (www.virtualofficenews.com). Bruckenstein writes for other publications, including Financial Advisor magazine and Financial Planning magazine. His practice-management and technology book, Virtual-Office Tools for a High-Margin Practice (Bloomberg Press, 2003), coauthored by David Drucker, has garnered universal praise from industry experts. The duo’s second book, Tools and Techniques of Practice Management (National Underwriter, 2004), has received excellent reviews in the financial press.

R. H. “Rick” Carey is recognized as one of the nation’s leading authorities on the variable annuity industry. He is the founder of the Variable Annuity Research & Data Service, or VARDS, where he designed and developed many of the industry’s analytical standards and benchmarks in use today. VARDS, founded in 1988, provides research and data on variable-annuity products. Carey sold VARDS in July 2000 to Info-One and left the firm in July 2005 to explore projects that address pressing needs in the industry. At VARDS, he introduced the VARDS Greenwald Strategy Service, a joint venture with Mathew Greenwald & Associates, which provided research and consulting services to companies in the annuity business. Working with distributors and manufacturers, VARDS Greenwald focused its efforts on targeted issues related to annuity product design and distribution in the retirement-income marketplace. Carey has also developed the Retirement Income Solutions Enterprise. Still in its nascent phase, the organization seeks to fill the recognized educational gaps that hamper the maturation of the retirement-income market. In 1991, he pioneered the movement to create an industry association to foster VA consumer education. This effort was instrumental in the founding of the National Association for Variable Annuities, where Carey served as a founding board member for nine years and chairman in 1998. NAVA inducted him into its hall of fame in 2001. Today, Carey is a member of NAVA’s Outlook editorial board and retirement-income education committee. He is a regular columnist for National Underwriter, Annuity Market News, and Advising Boomers and an information source for many financial-services publications. Before launching VARDS, Carey was a practicing registered investment adviser and president/principal of First Financial Investment Services, an NASD member firm. He holds degrees from the University of Miami and Florida State University, where he served for four years on the board of directors of the alumni association.

April K. Caudill, JD, CLU, ChFC, is the managing editor of Tax Facts and the Advanced Sales Reference Service at the National Underwriter Company, headquartered outside Cincinnati, Ohio. Her areas of specialty include qualified plans, ERISA, distribution planning, and the taxation of investments. Caudill is an associate editor and pension-planning columnist for the Journal of Financial Service Professionals and a member of the board of directors for the Society of Financial Service Professionals. She is the lead editor of Tools and Techniques of Employee Benefit and Retirement Planning, 9th ed. (Leimberg, 2005), and the coauthor of The Mutual Fund Handbook (National Underwriter Co., 2001). A frequent writer and speaker on retirement and distribution planning topics, Caudill writes regularly for TaxFacts News, National Underwriter Life and Health Edition, and Leimberg Information Service. She is a member of the American Bar Association, Taxation Section, as well as the Cincinnati Bar Association, and serves on its employee benefits committee. She is a graduate of the University of Cincinnati and the Salmon P. Chase College of Law of Northern Kentucky University.

Peng Chen, PhD, CFA, is managing director and chief investment officer at Ibbotson Associates in Chicago. Ibbotson Associates is an independent asset-allocation consulting firm that provides data, software, consulting, research, training, and presentation materials to investment professionals, and Chen is responsible for the firm’s overall research activities. His research projects focus on asset allocation, portfolio-risk measurement, nontraditional assets, and global financial markets, and he has contributed to the development of various Ibbotson products and services, including software, consulting services, educational services, and presentation materials. A recipient of the Articles of Excellence award from the Certified Financial Planner Board in 1996 and the 2003 Graham and Dodd Scroll Award from Financial Analysts Journal, Chen has written for numerous publications, including Financial Analysts Journal, Journal of Portfolio Management, Journal of Investing, Journal of Financial Planning, Bank Securities Journal, Journal of Association of American Individual Investors, Consumer Interest Annual, and Journal of Financial Counseling and Planning. Chen received his bachelor’s degree in industrial management engineering from Harbin Institute of Technology and his master’s and doctorate in consumer economics from Ohio State University.

Robert D. Curtis is the principal designer of MoneyGuidePro and the founder, president, and chief executive officer of PIE Technologies, which develops software for financial advisers. MoneyGuidePro was one of the first financial-planning programs created for the Internet; in May 2005, it was selected as one of the top three planning programs by Forrester Research. Curtis has more than 25 years’ experience as an innovator in the software industry, and for the past 16 years he has taken a leadership role in developing easy-to-use, interactive software for use by financial advisers with their clients. Before forming PIE Technologies in 1997, Curtis was founder and CEO of Compulife, an investment and insurance marketing firm, and Compulife Investor Services, a registered broker-dealer. By working with bank brokerage firms, Compulife became one of the top 10 industry marketing companies and was consistently the leader in the use of sales technology. At Compulife and Compulife Investor Services, Curtis and his development team created the first three generations of MoneyGuide financial-planning software. Curtis sold his interest in Compulife and founded PIE Technologies, so that he could focus exclusively on developing the next generation of financial-planning software for the Internet. Before joining Compulife, Curtis owned and managed a software-development company that focused on accounting software for small businesses. He has a bachelor’s degree in finance from Lehigh University.

Jeffrey K. Dellinger is president of Longevity Management Corporation, a consulting firm that advises institutions on retirement-income optimization, products, and markets. With more than 25 years in the financial-services industry, Dellinger is a fellow of the Society of Actuaries and a member of the American Academy of Actuaries, and has two variable-annuity patents pending. He provided successful leadership as Individual Annuity Profit Center Head for the Lincoln National Life Insurance Company, the third-largest U.S. annuity company, with $60 billion in assets. His responsibilities ranged from profitability and product development to marketing and distributor-relationship management. Dellinger’s extensive experience and strong analytic skills provide a unique vantage point for sharing insights about annuities and retirement income. He is a frequent speaker at national annuities conferences. His articles have appeared in such publications as Best’s Review, Life Insurance Selling, The VARDS Report, and Reinsurance Reporter, and he is the author of The Handbook of Variable Income Annuities (John Wiley & Sons, 2006), the most comprehensive volume on using variable annuities to generate retirement income. Dellinger’s advice on annuities is solicited for articles appearing in publications such as the Wall Street Journal, Fortune, and National Underwriter. He is a Phi Beta Kappa graduate of Indiana University, holding bachelor’s and master’s degrees in mathematics.

Harold Evensky, CFP, is chairman of Evensky & Katz, a wealth-management firm in Coral Gables, Florida. He has chaired the TIAA-CREF Institute Advisory Board, the International CFP Council, the CFP Board of Governors, the Board of Examiners, and the Board of Appeals. He’s also served as a member of the National Board of the International Association of Financial Planning and of the Charles Schwab Institutional Advisory Board and Council. He is a member of the Financial Planning Association, the Academy of Financial Services, and the CFA Institute, and an associate member of the American Bar Association. Evensky is an internationally recognized speaker on investment and financial-planning issues and has been honored by Worth as one of the Top 100 Wealth Managers, by Investment Advisor as one of the 25 most influential people in the financial-planning industry, and by Financial Planning Magazine as one of five Movers, Shakers and Decision Makers: The Most Influential People in the Financial Planning Profession. Investment News named him one of the 25 Power Elite in the financial-services industry, and Accounting Today has regularly listed him as one of the profession’s most influential people. In 1999, he was awarded the Dow Jones Investment Advisor Portfolio Management Award for Lifetime Achievement, and in 2002, his paper “Changing Equity Premium Implications for Wealth Management Portfolio Design” won the Journal of Financial Planning’s Call for Papers competition. Evensky is a contributing writer for Financial Advisor magazine and the Asian Financial Planning Journal, and a member of the editorial review board of the Journal of Financial Planning. He writes for and is quoted frequently in the national press, and is the author of Wealth Management (McGraw-Hill, 1997) and the coeditor with Deena Katz of The Investment Think Tank: Theory, Strategy, and Practice for Advisers (Bloomberg, 2005). Evensky received his bachelor’s and master’s degrees from Cornell University.

Mathew Greenwald, PhD, established his research and consulting company, Mathew Greenwald & Associates, in 1985. Since then, he has done strategic planning and marketing research for more than 100 of the most prominent financial-services companies and numerous other organizations. His firm has served Merrill Lynch, Fidelity Investments, Bank of America, MetLife, and Mass Mutual. Non-financial-services clients include AARP, Hershey Food Corporation, Sears, and the National Geographic Society. Before starting his business, Greenwald spent 12 years at the American Council of Life Insurance. From 1977 to 1985, he was ACLI’s director of social research and was responsible for programs monitoring public attitudes toward financial-services issues, demographic research, and futures research. Greenwald served as a Congress-appointed delegate to the 1998 and 2002 White House-Congressional National Summits on Retirement Savings and has testified before the U.S. Senate Committee on Aging and the Securities Exchange Commission on retirement and retirement-oriented products. He has published numerous articles in academic journals and trade periodicals and is frequently quoted by national print, radio, and television outlets, including national publications like the New York Times, the Wall Street Journal, and Time. He has spoken at numerous press conferences and professional meetings and is currently an elected member of the Market Research Council, a group of the country’s leading market researchers. Greenwald has a PhD in sociology from Rutgers University.

Douglas Head has been active in the viatical and life-settlement industry since 1992, having served as chair of the legislative committee, secretary, and president of the Life Insurance Settlement Association, based in Orlando, Florida. He has been the organization’s executive director since 2001. Head has lived around the world—as a student in Singapore, a Peace Corps volunteer in Paraguay, an executive with Hilton Hotels Corporation and Hilton International in Europe. He later established his own firm, providing hotel and restaurant management services, and served as a political consultant. Head is a graduate of Lawrence University in Appleton, Wisconsin.

Michael C. Henkel, president of Ibbotson Associates since 1997, joined the firm in 1993 as vice president in charge of its institutional software group. Before joining Ibbotson, Henkel worked for a variety of companies—including Knight Ridder, Lotus Development Corporation, NewsEdge Corporation, and Data Resources—integrating technology, data, and investments. Henkel has been widely quoted in publications, including Pensions & Investments, Plan Sponsor, Global Finance, Journal of Financial Planning, the Wall Street Journal, Worth, and Financial Planning. Henkel, who was selected as a delegate to the National Summit on Retirement Savings in 2002, frequently speaks at investment conferences in the United States and in Europe on topics including disbursement planning and the role of technology in investment advice. He received his bachelor’s degree in mathematics and economics from Rhodes College and his master’s in finance and quantitative methods from Vanderbilt University.

Roger G. Ibbotson is a professor in the practice of finance at Yale School of Management. He is also the chairman of Ibbotson Associates, with locations in Chicago, New York, and Tokyo, providing investment consulting, software, data, and financial publishing to financial institutions. Ibbotson conducts research on a broad range of financial topics, including investment returns, mutual funds, international markets, portfolio management, and valuation. He serves on numerous boards, including Dimensional Fund Advisors’ Funds and is a partner at Zebra Capital Management, a manager of equity hedge funds. Ibbotson’s book Stocks, Bonds, Bills, and Inflation (Ibbotson Associates, 1983), coauthored with Rex Sinquefield, is updated in the annual yearbooks published by Ibbotson Associates and serves as the standard reference for information on investment market returns. Ibbotson also coauthored Investment Markets (McGraw-Hill, 1987) and Global Investing (McGraw-Hill, 1993) with Gary Brinson. He is currently working on The Equity Risk Premium and is a regular contributor and editorial board member on both trade and academic journals. A recipient of many awards—including the Graham and Dodd Scroll Award in 1979, 1982, 1984, 2001, and 2003 and AIMR’s James R. Vertin award in 2001—Ibbotson frequently speaks at universities, conferences, and other professional forums. He received his bachelor’s degree in mathematics from Purdue University, his MBA from Indiana University, and his PhD from the University of Chicago, where he taught for more than 10 years and served as executive director of the Center for Research in Security Prices.

Deena B. Katz, CFP, is an internationally recognized financial adviser and practice-management expert. She is the author of six books on financial planning. Deena Katz on Practice Management (Bloomberg Press, 1999) and her newest best-selling book, Deena Katz’s Tools and Templates for Your Practice (Bloomberg Press, 2001), have become the leading texts on managing an independent financial-services business. More than 125,000 copies of her book Long-Term Care (Lee Simmons Assoc., 1993-1997) have been distributed to clients by major insurance firms. Katz served as editor-in-chief of the Journal of Retirement Planning and has been a contributing writer for Investment Advisor, Financial Planning Magazine, and National Underwriter. She was named one of Financial Planning Magazine ’s five most influential people for 2001, as well as one of Accounting Today’s Top Ten Names to Know in Financial Planning in 2001 and 2002. Worth magazine has also included her on its list of top financial advisers numerous times. Katz is frequently quoted by major national news media and has made various television appearances on local and national network programs for CBS, ABC, and PBS. Her speaking engagements span the country, and global financial services organizations call on her to address international financial forums worldwide. Katz has served as a consultant to many companies within the financial-services industry, including institutional brokers, money managers, and insurance companies. She received her bachelor’s degree from Adrian College and is a trustee of the college. She received a doctorate of humane letters from Adrian in 2001.

Robert P. Kreitler, CFP, is president of Kreitler Associates and a registered representative with Raymond James Financial Services. He specializes in financial planning, retirement planning, and investment management for professionals, including university professors. He writes frequently on retirement planning issues, is the author of Getting Started in Global Investing (John Wiley & Sons, 2000), and is a frequent guest on radio and television shows. Many of the ideas Kreitler writes about come from his firm’s work in helping to solve client problems. He has been involved in investments and financial planning for 20 years. Before that he worked in private industry and the federal government at the Office of Management and Budget. He attended Carleton College and Yale University.

Donald G. MacGregor, PhD, is president of MacGregor-Bates, in Eugene, Oregon. MacGregor has been an active researcher and consultant in the field of human judgment, decision making, and the psychology of risk for more than 25 years. His work is directed toward advancing the scientific understanding of risk and its role in decision making and improving the management of risk through better risk assessment and communication practices. Under the sponsorship of the National Science Foundation as well as other federal research agencies, MacGregor has conducted and managed research on risk assessment and decision analysis and their application to management decision making. He has served as a consultant on risk assessment and decision analysis to numerous public organizations, including the U.S. Department of Energy, the National Aeronautics and Space Administration, and the U.S. Nuclear Regulatory Commission. He has also been a consultant to industry, including General Motors Corporation, ARCO, Suzuki America, and Volvo. MacGregor is a member of the American Psychological Association, the Society for Risk Analysis, the Judgment and Decision Making Society, and the International Traffic Medicine Association. He is an associate editor of the Journal of Behavioral Finance, and his work has been published in peer-reviewed and professional journals; his research has been cited in numerous media sources, including the Wall Street Journal, Chicago Tribune, New York Times, Boston Globe, Kiplinger’s Personal Finance, National Public Radio, CNBC, and CBS MarketWatch. MacGregor received his bachelor’s and master’s degrees in psychology from California State University and his PhD in cognitive psychology from the University of Oregon.

Moshe A. Milevsky, PhD, is an associate professor of finance at the Schulich School of Business at York University and the executive director of the IFID Centre in Toronto. He is the co-founding editor of the Journal of Pension Economics and Finance and has published more than 30 scholarly articles and four books. Milevsky’s most recent book, The Calculus of Retirement Income (Cambridge University Press, 2006), expands on the ideas he developed for Chapter 10. One of his popular articles for media received a National Magazine Award (Canada, 2004). Milevsky has lectured widely on the topic of retirement-income planning, insurance, and investments in North America, South America, and Europe and is a frequent guest on national television and radio. He has a PhD (1996) in finance and an MA (1992) in mathematics, and was elected as a fellow of the Fields Institute (2002).

Jim C. Otar, CFP, CMT, started his financial-planning career in 1995 after spending several years in engineering and investing. Otar’s unique approach to wealth management comes from applying his engineering and technical analysis background to retirement planning. He is the author of two books, including High Expectations and False Dreams: One Hundred Years of Stock Market History Applied to Retirement Planning (2001). His first book was about Canadian dividend-reinvestment plans. Otar is working on a new book called The Mathematics of Retirement. He has written numerous articles and portfolio reviews for various magazines internationally and is quoted in the news media on retirement and financial-planning issues. His article series in Retirement Planning won him the prestigious CFP Board Award for 2001 and 2002. Otar’s website tracks the best-performing mutual funds in Canada, using a unique technique called FingerPrinting, which he developed. He is the founding member of the Canadian Retirement Advocacy Association as well as an active member of the Canadian Association of Pre-Retirement Planners. He is a past director of the Canadian Society of Technical Analysts. Otar completed his bachelor of applied sciences degree in mechanical engineering at the University of Toronto in 1975 and received his master’s in engineering there.

Cynthia Saltzman, PhD, CFP, is a professor of economics at Widener University, where she has been teaching since 1980. Her areas of specialization include monetary theory and financial institutions, productivity analysis, and topics in personal financial planning. Saltzman played a major role in the development of the financial-services undergraduate curriculum at Widener, and she teaches the capstone course in the program. Her work has been published in both academic economic journals and journals directed toward professionals in the financial-services industry. Saltzman is an associate editor for the Journal of Financial Service Professionals , where she writes the “Economics and Investment Trends” column three times a year. She received her bachelor’s degree in political science from Pennsylvania State University and her PhD in economics from the University of Maryland.

Louis P. Stanasolovich, CFP, is the founder, CEO, and president of Legend Financial Advisors, a fee-only investment-advisory firm headquartered in Pittsburgh. Legend provides wealth-advisory services, including comprehensive financial planning and investment management, to wealthy individuals as well as business entities. Stanasolovich is a member of the Financial Planning Association and is a registered financial adviser with the National Association of Personal Financial Advisors, the nation’s largest fee-only professional organization. He has appeared on national television on such programs as CBS This Morning, Wall Street Journal Television, CNBC’s Mutual Fund Investor and The Money Gang, and Fox News Channel’s Fox on Money and on various radio news broadcasts, including The Bloomberg Money Show and The Bloomberg Countdown. He has been quoted in a wide range of publications, including Barron’s, Business Week, Journal of Financial Planning, Money, Kiplinger’s Personal Finance, the New York Times, USA Today, and the Wall Street Journal. Stanasolovich’s articles have appeared on websites and in many publications such as Financial Planning Magazine, Financial Planning on Wall Street, Smart Business, Investment News, and TheStreet.com. He was selected twice by Robb Report Worth magazine as one of the Nation’s 100 Most Exclusive Wealth Advisors, six times by Worth magazine as one of the 250 Best Financial Advisors in America, five times by Medical Economics magazine as one of the 150 Best Financial Advisors for Doctors in America, and twice as one of the 100 Great Financial Planners in America by Mutual Funds magazine. Investment Advisor magazine named him to its 2004 IA 25 list, ranking the 25 most influential people in the financial-planning profession. J.K. Lasser’s New Rules for Estate and Tax Planning (John Wiley & Sons) named Stanasolovich one of the top advisers in the United States in 2002 and 2005. He was also one of the contributing financial advisers to Wall Street’s Picks by Kirk Kazanjian (Dearborn, 1998, 2000, 2001) and Tips From the Top: Targeted Advice From America’s Top Money Minds edited by Edie Milligan (Alpha, 2002). Stanasolovich graduated from Pennsylvania State University with a bachelor of science degree in accounting.

Lewis J. Walker, CFP, CIMC, CRC, has been in independent practice as a financial planner and registered investment adviser since 1976. He is the president of Walker Capital Management Corporation, a financial-planning and investment-advisory firm in Norcross, Georgia. Walker appears on local and national news shows and financial-management programs and has conducted seminars and workshops on a range of financial and investment topics across the country and abroad. He writes a column on future trends for the Journal of Financial Planning as well as a monthly column on economic history for On Wall Street magazine. His weekly column “The Investment Coach” appears in the Dunwoody Crier newspaper. Walker’s columns are also featured in the newspaper Inside Gwinnett and on the Web at www.moneybulletin.com. He was honored among the best financial planners by Worth magazine six years in a row and was cited as one of the leading financial advisers in the United States in New Rules for Estate and Tax Planning by Harold Apolinsky and Stewart H. Welch (J.K. Lasser, 2005). Walker has served as national president of the Institute for Certified Investment Management Consultants. As chairman of that organization, he helped to facilitate its merger into the Investment Management Consultants Association. He has served as national president and chairman of the Institute of Certified Financial Planners. In 1999, Walker received the John B. Keeble Award for Integrity and Excellence, presented by the Investors Financial Group. In 2004, the Money Management Institute recognized Walker with its prestigious Pioneer Award, citing his work in the blending of holistic financial-planning precepts with fee-based separate-account management. Walker received his undergraduate degree from the Georgetown University School of Foreign Service in 1960 and an MBA from Northwestern University in 1971. He achieved his Certified Financial Planner designation from the College for Financial Planning in 1975 and earned his Certified Investment Management Consultant designation in 1996. In 1999, the International Foundation for Retirement Education awarded him the designation of Certified Retirement Counselor.

FOREWORD

The Challenge of Retirement-Income Planning

THE 76-MILLION-STRONG baby-boom generation is slouching toward retirement. Indeed, the oldest boomers, the flower children of the ’60s, are now entering their 60s. Couple this transition from the work-a-day world to retirement with the demise of traditional defined-benefit pensions and concerns about the viability of Social Security, and you would think that almost all who are retired or nearing retirement would be making earnest preparations to turn savings in 401(k)s and other accounts into an income that can support them the rest of their lives.