Dynamic Income Distribution System

In 2009, the Certified Financial Planner Board of Standards sponsored the National Consumer Survey on Personal Finance to establish baseline data on consumer personal finance and financial planning related attitudes and behaviors1. Respondents selected “managing retirement income” as one of the most important financial planning issues in their lives. In spite of this being a critical issue for so many people, the same study found that only 17% of respondents have a financial plan in place and update it regularly. Compound this with statistics from the Employee Benefit Research Institute2 (EBRI) that state, as of March 2012, only 14% of Americans are confident in their ability to retire comfortably (a historically low rate); it is clear that retirement planning is a timely topic.

In this letter, we introduce an alternative method to evaluate retirement income and portfolio decisions throughout the entire retirement time horizon. We refer to this method as the Dynamic Income Distribution Approach™ (DIDA). In many cases, the conclusions reached when engaging in the DIDA approach may be similar to those reached under our traditional retirement planning method. However, this approach may increase your level of confidence in a retirement plan by looking at it in a different way. We start with a basic overview of the system, and use it to run a basic retirement income scenario. Please speak to your financial advisor if you are interested in running your retirement plan through the DIDA model. For the full paper:

Download (PDF)