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Part of my job as the Retirement Answer Man is to help you face the current issues that impact your retirement planning decisions. Part of that is the non-glamorous task of assessing the traditional approaches to retirement planning to see if they still work. So on this episode, I\\u2019m going to take a fairly deep dive into the institutional approach to asset allocation that has been the basis for retirement planning for many years - and I think once you understand the premise behind it, you\\u2019ll see that it\\u2019s a bit antiquated for modern retirement planning purposes. But never fear, I\\u2019m also going to point you in the right direction regarding how you can make up for the deficit!

An institutional approach for retirement asset allocation doesn\\u2019t work because YOU are not an institution.

I say that with my tongue planted firmly in my cheek, but I also really mean it. Institutions do a very good job of allocating their assets for THEIR particular goals, but YOUR goals for retirement are vastly different than theirs, don\\u2019t you think? So following their pattern may be helpful (and it is, in some ways) but it\\u2019s not enough. You need to know the potential pitfalls of following an institutional lead and how to avoid them. That\\u2019s why I\\u2019m here. :) This episode of The Retirement Answer Man will point you in the right direction and then next week, we\\u2019ll follow up with some more practical tips to get your retirement planning mindset up to date!

A Nobel Laureate says we have a problem with decumulation when it comes to retirement. What?

I think he made up the word but, Nobel Laureate William F. Sharpe of Stanford University has determined that things in our modern society have changed so much that we need to reassess how we approach retirement planning. A big part of the problem (he says) is that we have a phenomenon happening called \\u201cdecumulation.\\u201d It\\u2019s what happens when we hit retirement with resources that are inadequate to match our expected lifespan. As you can see, you\\u2019ll eventually run out of assets in that scenario. What\\u2019s he doing about it? He\\u2019s begun a study, naturally. On this episode of The Retirement Answer Man, I\\u2019m going to walk you through his premise and tell you how I approach the same problem, so be sure to listen.

Institutions are not emotional. You are. How does that impact your retirement planning?

As I\\u2019ve said before, we\\u2019ve long followed an institutional approach to asset allocation when it comes to retirement planning simply because the rationale was that the managers of financial institutions manage assets for a living, so they must know what they are doing. Generally speaking, that\\u2019s true - but the real issue is that institutions have different investment goals than individuals do, and they approach those goals non-emotionally - which individuals do NOT do. That alone makes a huge difference in how you are going to make decisions and could set you up for some serious disappointments. On this episode, I address those difference and give you some tips for how to offset them.

What IS your desired outcome for retirement\\u2026 hmmmmmm?

As Zig Ziglar famously quipped, \\u201cIf you aim at nothing, you\\u2019ll hit it every time.\\u201d It\\u2019s so obvious you probably laugh when you hear it said so bluntly. I do too. And I think part of why I laugh is because I see how applicable it is to retirement planning. If you don\\u2019t know what you really WANT for your retirement, how will you be able to plan in a way that enables you to accomplish it? You probably won\\u2019t even get close - which would be tragic. So, on this episode\\u2019s, \\u201cSmart Sprint\\u201d segment I have a challenge for you. Are you up for it? Listen to find out.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

• [0:40] Personal accountability, potato chips on the couch, and other vices we want to change.

HOT TOPIC SEGMENT

• [3:16] News that \\u201cdecumulation\\u201d is a problem that smart minds are trying to address.
• [4:44] Longevity\\u2019s role in decumulation - and don\\u2019t forget about inflation and the timing of retirement income and spending patterns.
• [6:25] My take on how to handle this decumulation issue.

PRACTICAL PLANNING SEGMENT

• [7:05] Is asset allocation alone enough to deal with decumulation?
• [8:43] The differences between your private situation and how institutions handle investments.
• [12:24] Does the institutional approach to asset allocation fit today?
• [16:25] Looking at historic averages for rolling returns.
• [19:25] When the magical power of dollar cost averaging starts to work in reverse. Uggg.

TODAY\\u2019S SMART SPRINT SEGMENT

• [24:46] Start asking yourself, \\u201cWhat is my desired outcome for retirement?\\u201d

THE HAPPY LAB SEGMENT

• [25:45] My experience doing a \\u201cbreakout\\u201d session at the mall. It was a blast!

RESOURCES MENTIONED IN THIS EPISODE

Contact Roger: http://www.rogerwhitney.com/retirementanswers/

Roger\\u2019s retirement learning center: www.RogerWhitney.com/learn

The Retirement Answer Man Facebook page: www.Facebook.com/RetirementAnswerMan

The Retirement Income Scenario Matrix Project - through Stanford University