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Comment Letter by Actuary Kenneth A. Steiner to EBSA on Benefit Statement Proposals (PDF)

"EBSA has decided that the safe harbor disclosure of the monthly payment associated with the Current Balance should be determined by converting the current balance to a life annuity equivalent assuming the participant has reached his or her normal retirement age ... under the plan on the date of calculation, even if the participant is much younger on such date. EBSA explains the rationale for this calculation as the payment the participant would receive today for life if he/she were old enough today (i.e., [had] reached the normal retirement date). The result of this methodology is to effectively assume no investment return on the current account balance between current age and normal retirement date.... [T]his is not the accrued benefit associated with the current balance; it is potentially misleading and not particularly helpful to someone who is trying to plan for retirement."

Retired Actuaries Submit Comments to DOL Regarding Disclosure of Lifetime Income Stream Equivalents

"The DOL Lifetime Income Calculator should allow input of alternative assumptions, retirement ages, participant data, etc. to further facilitate retirement planning by participants ... The model disclosure language should direct participants to the DOL Lifetime Income Calculator to enable them to model different assumptions, different retirement ages, future contributions, etc."

It's That Time of Year: Retired Households Should Perform Their Actuarial Valuations

"A household actuarial valuation involves calculating and comparing present values of household assets and household spending liabilities for the purpose of determining the household's Funded Status. To do this, [the authors] suggest you follow the easy 5-step valuation process outlined [in this post, using the] Actuarial Financial Planner (AFP) models."

Front-Loading Spending in Retirement

"If your risk tolerance is relatively high, you prefer increased spending early in retirement, and you aren’t overly troubled by the thought of decreasing discretionary spending in the future, you may wish to use more aggressive assumptions and/or lower funding targets."

An Analysis of JP Morgan's Dynamic Withdrawal Strategy

"[B]ased on [specific] assumed investment experience, the JP Morgan strategy produces a spending budget that is somewhat more volatile (when measured in inflation adjusted dollars) than the Steiner Actuarial Approach. Because it is more aggressive ... it produces higher spending budgets each year and therefore lower remaining assets at the end of the five year period.... If comparable assumptions are used, results under the two methods can be comparable, and the smoothing algorithm in the Steiner Actuarial Approach results in more real dollar stability in the retiree's spending budget from year to year."

Using the Actuarial Approach to Avoid Financial Traps in Retirement

"[The authors] summarize and briefly discuss the eleven financial traps (or risks) set forth in [a recent article] and how almost all these risks are relatively easily addressed by applying the Actuarial Approach."

Measuring Personal Funding Risks After Retirement

"If planning assumptions or expectations about the future are wrong in the aggregate (and they will be), [retirees] must be prepared to make adjustments in our spending or somehow increase our assets to keep our finances in balance. And, unfortunately, a lot can potentially go wrong with personal financial assumptions."

How Should Future Social Security 'Reform' Affect Your 2021 Spending Budget?

"[F]uture Social Security reform may decrease the future benefits you receive from the system and/or increase your future taxes in some manner.... [C]onsider how future uncertain Social Security reform might affect your current spending budget. To help you do this, this post will discuss the estimated size of Social Security's financial problem and several ways you can [the authors'] Actuarial Budget Calculator workbooks to reflect the potential impact of future system reform in your current financial plan."

Are You Still Worried About Increasing Your Spending in Retirement?

"The 'spend-less' Funding Status guardrail [the authors] recommend is 95%, and the 'spend-more' guardrail ... for considering increased spending was 120% ... [T]he 120% spend-less guardrail is not 'bullet-proof', but it is fairly robust, and the consequence of falling below 95% doesn't mean that you are bankrupt. It means that you might be required to temporarily or permanently reduce some discretionary spending. "

Use the Funded Status Metric and a 'Surplus Bucket' to Increase Spending in Retirement

"The purpose of this post is to provide assistance to readers who aren’t necessarily interested in buying more life annuities than they need to cover their essential expenses, but would like to maximize their spending to the extent possible without leaving an unintended large estate when they pass (assuming their demise does not occur earlier than expected)."