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Wade Pfau, Retirement Planning Guidebook, retirement styles

Posted: Wed Jun 22, 2022 11:19 am
by joypog
I haven't read the full book since my library doesn't own a copy, but the sample is pretty extensive, including the complete first chapter, available on overddrive .

His basic thesis is that everyone has their own retirement style that can be broken down among four quadrants with two major axis -

Safety First / Probability Based
Optionality / Committment

I presume the meat of the book addressses how to set up your retirement to best fit your personal style.

I dig the idea. My guess is that most of the folks that follow the PP are in the Safety-First + Optionality quadrant. May be worth checking out as we (re)assess our strategies in this everything falling market.

Re: Wade Pfau, Retirement Planning Guidebook, retirement styles

Posted: Wed Jun 22, 2022 12:46 pm
by Kbg
What's "Risk Wrap?"

Re: Wade Pfau, Retirement Planning Guidebook, retirement styles

Posted: Wed Jun 22, 2022 10:03 pm
by vnatale
Kbg wrote:
Wed Jun 22, 2022 12:46 pm

What's "Risk Wrap?"


August 19, 2021 , Income Strategies
Wade Pfau’s Income Expert Success Tools

https://retirementincomejournal.com/art ... cess-tool/


“risk wrap” (the use of deferred annuities with lifetime income benefit riders).

Re: Wade Pfau, Retirement Planning Guidebook, retirement styles

Posted: Wed Jun 22, 2022 11:56 pm
by joypog
These were in the publisher sample on overdrive so I think this explanation from chapter one is ok to share.

(to confirm, the screen shot is the entire section on risk wrap, the next page starts with the section on Time Segmentation stratiges).
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Screenshot 2022-06-22 215539.png
Screenshot 2022-06-22 215539.png (209.61 KiB) Viewed 209 times

Re: Wade Pfau, Retirement Planning Guidebook, retirement styles

Posted: Thu Jun 23, 2022 3:38 pm
by mathjak107
Always keep in mind pfau is an annuity salesman first and a researcher second .

He is big on annuities in all his studies

Re: Wade Pfau, Retirement Planning Guidebook, retirement styles

Posted: Thu Jun 23, 2022 4:04 pm
by Desert
mathjak107 wrote:
Thu Jun 23, 2022 3:38 pm
Always keep in mind pfau is an annuity salesman first and a researcher second .

He is big on annuities in all his studies
I may be interpreting your claim in bold too literally, but I'm pretty sure Pfau does not sell annuities. He does include annuities in his research and frequently in his recommendations, to mitigate sequence-of-return and longevity risks. But I wouldn't call him an annuity salesman.

He is quite "dry" though, both his writing and speaking. Excellent insomnia cures.

Now if you want a real annuity salesman, go to "Stan the Annuity Man," with the podcast "Fun with Annuities." That may well be the best podcast name ever.

Re: Wade Pfau, Retirement Planning Guidebook, retirement styles

Posted: Thu Jun 23, 2022 8:08 pm
by joypog
Desert wrote:
Thu Jun 23, 2022 4:04 pm
mathjak107 wrote:
Thu Jun 23, 2022 3:38 pm
Always keep in mind pfau is an annuity salesman first and a researcher second .
I may be interpreting your claim in bold too literally, but I'm pretty sure Pfau does not sell annuities. He does include annuities in his research and frequently in his recommendations, to mitigate sequence-of-return and longevity risks. But I wouldn't call him an annuity salesman.
Yup, that's a critical difference.

His podcast on "Retire with Style" seems pretty even handed. In fact he's perfectly fine with "total returns" retirement planning...just not as the only option out there. And he also believes that annuities are a viable option that is often overlooked.

(Assuming he doesn't have an underhanded kickback) this wouldn't make him an "annuities salesman first"....and if he is, damn he's doing a bad job at sales.

Re: Wade Pfau, Retirement Planning Guidebook, retirement styles

Posted: Fri Jun 24, 2022 2:58 am
by mathjak107
Pfau is principal and director of McLean asset mgmt …,he has a big vested interest in selling annuity products

Re: Wade Pfau, Retirement Planning Guidebook, retirement styles

Posted: Fri Jun 24, 2022 8:30 am
by joypog
mathjak107 wrote:
Fri Jun 24, 2022 2:58 am
Pfau is principal and director of McLean asset mgmt …,he has a big vested interest in selling annuity products
Fair enough. But its an ad hominum that is so universal to be unactionable. Almost all of the writers in this space are tied to private firms who sell some sort of financial product.

I suspect that the mathematically optimal approach to retirement savings (once you've hit a minimum threshold) is most likely the "Total Returns" strategy in the market - if you can stomach the joyride.

People aren't mathmatically optimal in their outlook on life. The boom in behavioral finance is a recognition of that reality. As such, other strategies such as bucketing strategies or annuities (in my case, working for a government pension) may be a better fit for those personalities.

To me, relying on a behaviorally suboptimal (for one's personality) strategy carries its own danger - selling out at the wrong time, too much worry, etc. Its best to select a stategy that best fits one's outlook than to try to squeeze a few bps out of one's portfolio.

In his podcast, their surveys show that the "Income protection" (lower right, 35%) and "Risk Wrap" (lower left, 15%) personality types constitute about half the population. To say one has a 50/50 chance to be a good candidate for purchasing a type of product is a pretty soft sell, especially compared to other retirement gurus who have much stronger opinions on how one should invest their retirement savings.

(To complete the matrix, the other half is constituted of 35% "Total-Return" (upper left) and 15% "Time Segmentation" (bucketing strategy, upper right)

Re: Wade Pfau, Retirement Planning Guidebook, retirement styles

Posted: Fri Jun 24, 2022 8:54 am
by mathjak107
He is always a bit to pro annuity for my taste .

His studies are interesting but they always seem to have an annuity slant to them..so as long as one is aware he has a vested interest he isn’t a bad source for data

Re: Wade Pfau, Retirement Planning Guidebook, retirement styles

Posted: Fri Jun 24, 2022 9:50 am
by Desert
mathjak107 wrote:
Fri Jun 24, 2022 2:58 am
Pfau is principal and director of McLean asset mgmt …,he has a big vested interest in selling annuity products
The first part of that statement is correct, but it's not worth arguing about the second part.

To everyone else but mathjak, I would recommend taking a look at Pfau's work.

Re: Wade Pfau, Retirement Planning Guidebook, retirement styles

Posted: Fri Jun 24, 2022 9:52 am
by Desert
joypog wrote:
Fri Jun 24, 2022 8:30 am

I suspect that the mathematically optimal approach to retirement savings (once you've hit a minimum threshold) is most likely the "Total Returns" strategy in the market - if you can stomach the joyride.
I agree. And SS will provide a floor of sorts for most of us, so the combination of SS + Total return makes a lot of sense. Add in another pension, and you finally get the three legs of the stool. Most of us will be teetering around on a two-legged stool.