Planning For and Living in Retirement
Retirement is the biggest investment most individuals will undertake during their lifetime, and funding a comfortable retirement requires a substantial amount of savings throughout an individual’s working career. There are two main phases of retirement planning: accumulation and decumulation. The accumulation phase is the retirement savings that occurs during an individuals’ working life. The decumulation phase is the spending down of accumulated savings to pay for living expenses during retirement. It is important to plan for both phases. Decumulation can involve a considerable amount of uncertainty, such as how much to allocate for medical costs and how long retirement savings need to last. The development of a spend-down strategy that determines how savings will be spent over the course of retirement can help minimize the financial stress that can arise from uncertainty.