Safety-First Retirement Planning

Did you know that there is more than one way for retirees to meet their financial goals? Not everyone is comfortable relying on stock market returns from their investments. This book explains a different approach that first builds safety through a floor of reliable lifetime income.

This is the meaning of safety-first retirement planning.

In this book you will learn:

• How risk-pooling through insurance works
• Why risk pooling is a source of additional spending that is competitive with potential stock market returns
• How commercial annuities provide this risk pooling in the same manner as Social Security or traditional company pensions
• How replacing some bonds with insurance-based risk pooling assets can improve the odds for retirees to meeting their spending goal and to support more legacy at the end of life

I walk you through this thought process and logic in steps, investigating three basic ways to fund a retirement spending goal: with bonds, with a diversified investment portfolio, and with risk pooling through annuities and life insurance alongside investments.

I describe the potential role and underlying workings for different types of annuities including simple income annuities, variable annuities, and fixed index annuities. I explain how different annuities work and how readers can evaluate their options and make a choice about which way to go. I also examine the potential for whole life insurance to contribute to a retirement income plan.

When we properly consider the range of risks introduced after retirement, I conclude that the integrated strategies preferred by safety-first advocates support more efficient retirement outcomes. Safety-first retirement planning helps to meet financial goals with less worry. This book gives you the knowledge to evaluate different insurance options and implement these solutions into an integrated retirement plan.

How did I come to write this book? After completing my Ph.D. in Economics from Princeton University with a dissertation about Social Security reform, I become an economics professor who studied the pension systems in different countries. Eventually I gravitated toward individual retirement planning and now work with unique job title of "Professor of Retirement Income" and as director of the Retirement Income Certified Professional® designation for financial advisors. This requires me to be agnostic and to search for the best with different retirement income styles. If the safety-first approach isn't for you, you might also check my explanation about probability-based alternatives in How Much Can I Spend in Retirement?

Wade D. Pfau, PhD, CFA, RICP® is the founder of Retirement Researcher, an educational resource for individuals and financial advisors on topics related to retirement income planning. He is a co-founder of the Retirement Income Style Awareness tool and a co-host of the Retire with Style podcast. He also serves as a principal and the director of retirement research for McLean Asset Management. He also serves as a Research Fellow with the Alliance for Lifetime Income and Retirement Income Institute. He is a professor of practice at the American College of Financial Services and past director of the Retirement Income Certified Professional® (RICP®) designation program. He holds a doctorate in economics from Princeton University and has published more than sixty peer-reviewed research articles in a wide variety of academic and practitioner journals. He is a contributor to Forbes, Advisor Perspectives, and an Expert Panelist for the Wall Street Journal. Wade is the author of four books, Retirement Planning Guidebook: Navigating the Important Decisions for Retirement Success, Safety-First Retirement Planning: An Integrated Approach for a Worry-Free Retirement, How Much Can I Spend in Retirement? A Guide to Investment-Based Retirement Income Strategies, and Reverse Mortgages: How to Use Reverse Mortgages to Secure Your Retirement.