In this episode of Retire with Style, Alex Murguia and Wade Pfau dive into key retirement planning topics, including sequence risk, the 4% rule, withdrawal strategies, and bond yields. They highlight the importance of a comprehensive financial plan that accounts for asset allocation, tax considerations- such as those related to TIPS and annuities- and the role of dynamic, risk-based guardrails. The discussion underscores how retirement income strategies must adapt over time to meet changing needs.

Takeaways

• Sequence risk is a critical factor in retirement planning.
• The 4% rule may not be applicable in all scenarios.
• Bond yields significantly impact sustainable withdrawal rates.
• Fixed percentage withdrawal strategies can mitigate sequence risk.
• Dynamic risk-based guardrails offer a flexible approach to spending.
• Financial planning is essential for effective retirement income management.
• TIPS are less tax-efficient than other bonds and should be placed in tax-advantaged accounts.
• Asset allocation should be tailored to individual risk tolerance and retirement goals.
• The traditional 100 minus age rule for asset allocation is a simplification.
• Retirement strategies should adapt as circumstances change.

Chapters

00:00 Introduction and Conference Insights

02:11 Exploring Sequence Risk and Spending Strategies

03:35 Understanding the 4% Rule and Bond Yields

10:19 Fixed Percentage Withdrawal Strategies

14:06 Dynamic Risk-Based Guardrails for Spending

20:06 The Role of Financial Planning in Retirement

27:18 Tax Implications of TIPS and Asset Location

29:56 Evaluating Stock-Bond Allocation Strategies

Links

Join Our Next Live Q&A Session! We’re hosting our next Retire With Style YouTube Live Q&A on Monday, August 25th at 2:00 PM ET. Wade and Alex will be answering your retirement planning questions live!

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Explore the New RetireWithStyle.com! We’ve launched a brand-new home for the podcast! Visit RetireWithStyle.com to catch up on all our latest episodes, explore topics by category, and send us your questions or ideas for future episodes. If there’s something you’ve been wondering about retirement, we want to hear it!

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2025! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/

This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

In this episode of Retire with Style, Alex Murguia and Wade Pfau explore how buffer assets can help manage sequence risk in retirement. They discuss different types of buffer assets—including cash, home equity lines of credit (HELOCs), multi-year guaranteed annuities (MYGAs), and whole life insurance—and examine the trade-offs involved with each. Wade also shares insights on the evolving role of reverse mortgages in retirement planning, emphasizing the importance of weighing costs and long-term implications when incorporating these tools into a financial strategy.

Takeaways

• Buffer assets help manage sequence risk by providing a safety net.
• Cash, HELOCs, and life insurance can serve as buffer assets.
• HELOCs may not be reliable during market downturns.
• MIGAs can be considered buffer assets under certain conditions.
• CDs can also function as buffer assets if withdrawal penalties are minimal.
• Reverse mortgages offer unique advantages but come with costs.
• The perception of reverse mortgages has evolved over time.
• Long-term care costs can be partially covered by reverse mortgages.
• Whole life insurance allows borrowing against cash value.
• Understanding the terms of financial products is crucial for effective planning.

Chapters

00:00Introduction and Overview of Sequence Risk

02:24Understanding Buffer Assets

05:32Exploring Alternatives: HELOCs and Other Options

08:51Evaluating Multi-Year Guaranteed Annuities (MIGAs) as Buffer Assets

10:51The Role of CDs and Fixed Indexed Annuities

13:27The Case Against Gold as a Buffer Asset

16:12Reverse Mortgages: Risks and Benefits

19:19Changing Perceptions of Reverse Mortgages

22:31Long-Term Care and Reverse Mortgages

25:38Whole Life Insurance Loans and Their Implications

Links

Explore the New RetireWithStyle.com! We’ve launched a brand-new home for the podcast! Visit RetireWithStyle.com to catch up on all our latest episodes, explore topics by category, and send us your questions or ideas for future episodes. If there’s something you’ve been wondering about retirement, we want to hear it!

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2025! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/

This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this episode of Retire with Style, hosts Alex Murguia and Wade Pfau explore how to manage sequence of returns risk in retirement. They break down four key strategies: spending conservatively, staying flexible with spending, reducing investment volatility, and using buffer assets. The discussion also touches on how sequence risk can arise more than once—especially for early retirees—and how having a pension can affect your overall risk tolerance. Throughout the episode, they emphasize the value of starting retirement on solid footing and building a margin of safety into your plan.

Takeaways

• Sequence of returns risk is crucial for retirees.
• Four strategies to manage sequence of returns risk exist.
• Spending conservatively can mitigate risk.
• Flexible spending strategies can adapt to market conditions.
• Reducing investment volatility is essential for stability.
• Buffer assets provide a safety net during downturns.
• Early retirement years are particularly vulnerable to risk.
• A good start in retirement can set the tone for success.
• Pension income can change portfolio risk tolerance.
• Understanding personal risk preferences is key to financial planning.

Chapters

00:00Introduction to Sequence of Returns Risk

07:33Understanding the Four Strategies to Manage Risk

17:14Exploring Multiple Sequence of Returns Risks

19:30Portfolio Risk and Pension Considerations

Links

Explore the New RetireWithStyle.com! We’ve launched a brand-new home for the podcast! Visit RetireWithStyle.com to catch up on all our latest episodes, explore topics by category, and send us your questions or ideas for future episodes. If there’s something you’ve been wondering about retirement, we want to hear it!

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2025! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/

This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips