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May 22, 2025
Listen in as Wade Pfau, PhD, CFA, RICP® discusses the key risks and variables that may contribute to a client’s preferred retirement style at Horizons 2025!
Professor of Practice Wade Pfau, PhD, CFA, RICP® breaks down how to choose the right retirement approach for your client at Horizons 2025, The College’s flagship retirement planning event. Climbing the mountain, Pfau warns, is just the start of the retirement income planning journey.
Beginning with a discussion of the retirement longevity risk, Pfau says that longer lifespan, inflation, market volatility, and personal spending are all core factors for retirement advisors and clients alike to consider when determining a retirement plan. To address these concerns, he explains, there are four broad retirement income planning approaches to consider: total return, time segmentation, income protection, and risk wrap. These four core approaches to retirement, discussed in even greater detail in the Retirement Income Certified Professional® (RICP®) curriculum, are all viable strategies that depend on the client’s preferences.
Following an extensive overview of retirement risks and styles, Pfau dives into the methodology and results of his institutional research collaborations. The findings of these nationally representative studies identify six relevant factors that impact retirement style decision-making.
Two of the six factors Pfau identifies are considered primary factors:
- Probability vs. Safety-First
- Optionality vs. Commitment
The remaining four factors are considered secondary factors, including:
- Time-Based vs. Perpetuity Income Floors
- Accumulation vs. Distribution
- Front-Loading vs. Backloading Retirement Income
- True vs. Technical Liquidity
Pfau concludes the presentation with an examination of how the correlations between the six retirement income planning factors and the four core factors to approaching retirement above can help optimize retirement planning. To best serve clients’ needs, retirement advisors must be able to understand the implications of these factors and build unique retirement plans with them.
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