FINANCIAL-PLANNING tools largely assume retirement spending is relatively predictable, and that it increases annually with inflation regardless of an investment portfolio’s performance. In reality, retirees typically have some ability to adapt spending and adjust portfolio withdrawals to prolong the life of their portfolios, especially if those portfolios are on a declining trajectory.
Our latest research on the perceptions of retirement-spending flexibility provides evidence that households can adjust their spending, and that adjustments are likely to be less cataclysmic than success rates and other common financial-planning-outcomes metrics imply.
This suggests that spending flexibility needs...
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