Research into dynamic retirement income planning has often focused on setting “guardrails” based on portfolio withdrawal rates. However, client scenarios often do not lend themselves to simple withdrawal-rate-based planning. When realistic changes in expected income needs and non-portfolio income sources like Social Security are included in the picture, we need a more powerful approach to income guardrails. Guardrails based on total, holistic income risk provide a more generalizable and intuitive way to plan for dynamic retirement income.
Justin Fitzpatrick is President and Co-Founder of Income Lab, retirement income planning software used by thousands of financial advisors. He developed the guardrails-based approach to retirement income distribution after a decade in financial services at Jackson and seven years in academia at MIT, Harvard, and UCLA. His research on adjustment-based planning has been published on Kitces.com, ThinkAdvisor, AdvisorPerspectives, and FinancialPlanning Magazine.
