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 The declining role of corporate defined benefit (DB) pensions and their implicit salaries for life means financial advisors must become risk managers for their clients during the distribution phase of retirement, according to Moshe Milevsky, Ph.D. – Finance Professor, York University, and Executive Director of the Individual Finance and Insurance Decisions Center.
According to Milevsky – as well as many other Boomertirement participants – financial advisors must help Baby Boomers transition their retirement plans and non-sheltered savings into “pseudo-DB” pensions that protect against the most common risks retirees face:
- Longevity – The difficulty in planning for the full unknown length of the human lifecycle
- Inflation – Most DB pensions offered cost-of-living adjustments to protect against inflation
- The Sequence of Investment Returns – Starting retirement with poor market returns can be devastating to a retirement portfolio
Milevsky also encouraged financial advisors to consider retiree cost of living – which is quite different from that of average consumers due to their unique needs and spending habits – and tailor their financial planning models to individual clients.
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Presentation Excerpt: The Calculus of Retirement Income … For Poets
Excerpt taken from previously recorded presentation. |
Boomertirement Session Slides Handout
IFID Center Web site
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