Because you wouldn’t want to sell tissue
This is a follow-up article from the previous article I wrote on “Retirees, here is an example of converting capital gains to an income stream“.
Professional financial planners have been debating ways to improve the success rate of the retirement portfolio. ‘Success’ is defined as the retiree not outliving his or her resources.
The success rate of the retirement portfolio depends very much on the following factors:
- Expected returns of the retirement portfolio;
- Expected withdrawal rate;
- Volatility of the retirement portfolio;
- Expected Inflation;
- Expected expenditure and where the retirement portfolio is required to fund ‘long-tail’ expenses such as medical and disabilities; and
- Risk tolerance of the retiree.
Among all the factors above, I have found that most retirees find it hard to understand the impact of volatility. Without understanding the impact of volatility, the success rate of the retirement portfolio is ...
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