Retirement Policy Statement (RPS) -- Is anyone else using one?

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WoodSpinner
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Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by WoodSpinner » Wed Nov 08, 2017 11:04 am

As part of planning for retirement this year, I decided to build a Retirement Policy Statement (RPS) to document our retirement finances, cash-flows, and key strategies. Originally I was inspired by an article on Morningstar but this has quickly morphed into a much more extensive document.

This document is designed to also align with my Investment Policy Statement (IPS) as well as the

Some of the key advantages I found in putting this together include:
1. Insures my DW and I have alignment and a clear vision of our goals.
2. Provides documentation that describes the rational behind key decisions (e.g. take a pension rather than a lump sum) and what watchpoints (e.g. change in tax law), might cause us to re-think the decision.
3. Describes how bills will be paid, expected cash-flows, and other financial strategies needed to fund our retirement.
4. Becomes a vehicle my DW can use in case I pass early or loose my faculties.
5. Provides a framework that ensures you are well prepared to retire.

At this point I am looking for feedback on:
1. Do you see a value in building an RPS for yourself?
2. Suggestions for improving the template?
3. Anything missing?

Help me refine the template and make it even more useful for the Boglehead community.

Word - Model Retirement Policy Statement or
PDF- Model Retirement Policy Statement

Looking forward to your feedback!

WoodSpinner

euroswiss
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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by euroswiss » Wed Nov 08, 2017 11:18 am

I think this is a great idea, but my guess is that few will want to invest the time to populate a document that detailed. I know, I'm not - I'm looking for something significantly simpler. That said, you are clearly a "process guy" and have the energy to pull this off. It will be valuable once completed. Thanks for sharing

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by 1210sda » Wed Nov 08, 2017 11:31 am

Very nicely done.

You mention that one of the reasons for doing this is..."Becomes a vehicle my DW can use in case I pass early or loose my faculties."

Is your DW able to manage the portfolio as currently designed ? Would she know how to re-balance ?

If she can, that's great. If not, perhaps a section on "simplification" is in order. (The three fund portfolio, or the Lifestrategy funds, etc.)

1210

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by WoodSpinner » Wed Nov 08, 2017 12:22 pm

1210sda wrote:
Wed Nov 08, 2017 11:31 am
Very nicely done.

You mention that one of the reasons for doing this is..."Becomes a vehicle my DW can use in case I pass early or loose my faculties."

Is your DW able to manage the portfolio as currently designed ? Would she know how to re-balance ?

If she can, that's great. If not, perhaps a section on "simplification" is in order. (The three fund portfolio, or the Lifestrategy funds, etc.)

1210
Great questions ....

I built a pretty good tool (see this post) that she can use to Rebalance the portfolio as well as funding Expenses, Roth Conversions and QCDs. She has used it for several cycles at this point and while not foolproof its worked very well. Reviewing the recommendations with her as also proved really helpful in helping both of us think about a variety of trade-offs that need to be considered.

I also went through a fairly drastic Portfolio Simplification exercise this year (see this post) and greatly simplified everything. Not convinced she can totally manage it by herself but its a lot simpler than what it used to be. We have used the Investment Policy Statement (IPS) in a similar manner to the RPS and use it to document our investment strategies and communication tool.

Have you done something similar?

WoodSpinner 8-)

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by mickeyd » Wed Nov 08, 2017 1:04 pm

Thanks for the RPS idea. Its' a new concept to me. I have a working IPS and this simple 2 page document will be used to supplement my IPS. Most of the concepts in the RPS have already been implemented already in my updated version of my IPS. Thanks again.
Last edited by mickeyd on Thu Nov 09, 2017 1:34 pm, edited 1 time in total.
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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by 2015 » Wed Nov 08, 2017 7:41 pm

WoodSpinner wrote:
Wed Nov 08, 2017 11:04 am
As part of planning for retirement this year, I decided to build a Retirement Policy Statement (RPS) to document our retirement finances, cash-flows, and key strategies. Originally I was inspired by an article on Morningstar but this has quickly morphed into a much more extensive document.

This document is designed to also align with my Investment Policy Statement (IPS) as well as the

Some of the key advantages I found in putting this together include:
1. Insures my DW and I have alignment and a clear vision of our goals.
2. Provides documentation that describes the rational behind key decisions (e.g. take a pension rather than a lump sum) and what watchpoints (e.g. change in tax law), might cause us to re-think the decision.
3. Describes how bills will be paid, expected cash-flows, and other financial strategies needed to fund our retirement.
4. Becomes a vehicle my DW can use in case I pass early or loose my faculties.
5. Provides a framework that ensures you are well prepared to retire.

At this point I am looking for feedback on:
1. Do you see a value in building an RPS for yourself?
2. Suggestions for improving the template?
3. Anything missing?

Help me refine the template and make it even more useful for the Boglehead community.

Word - Model Retirement Policy Statement or
PDF- Model Retirement Policy Statement

Looking forward to your feedback!

WoodSpinner
Absolutely, except in my case I've just kept the same IPS title on the document. I forget where I read that one of the key benefits of having this kind of document is that it forces you to think through your decisions in advance. In the heat of a crisis, reviewing you rationale will help you "stay the course." I've broken the "one-page" IPS rule by having a rather long (by BH and Morningstar standard) IPS document. It really helps every time I see some new thread or idea to go back and review why I didn't choose that idea, but why what I've already thought through is right for my particular situation. Your #'s 1-5 are all contained in my retirement IPS.

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by WoodSpinner » Sun Nov 12, 2017 9:45 am

Bump to see if there are other insights....

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by MikeG62 » Sun Nov 12, 2017 10:18 am

WoodSpinner,

I developed a detailed Withdrawal Policy Statement after reading this post by Kitces:

https://www.kitces.com/blog/crafting-a- ... ns-guyton/

I started with Guyton's template (which can be accessed in that post) and then enhanced it by tailoring it my specific situation. Mine is 8 pages long (about 3 pages of which are footnotes and explanations to support conclusions reached in the WPS itself).

FWIW, I happen to be following Guyton and Klingers decision rules so this WPS dovetailed nicely with those rules (which have been customized for my situation and set forth in detail in the WPS). I also have a separate multi-page Investment Policy Statement (in some ways, these two documents go hand in hand).

It apppears to me that you are working on something very much along these lines. I think it is a great idea - something everyone thinking about retiring should develop (before they retire).
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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by siamond » Sun Nov 12, 2017 10:40 am

I never understood the focus on "Investment" and the "IPS" terminology. As I was planning for early retirement, there were multiple topics (policies) that I wanted to put in writing that just didn't fit in an IPS, starting by the most important, how to withdraw from my portfolio. I pondered about a Withdrawal Policy Statement, like the previous poster. Beats me why many posters on this forum seem to be very rigorous about their investments, and then totally wing it for their withdrawals (or use a broken concept like the "4% rule"). Then I started to think about budget tracking, another truly fundamental tenet of a sound financial life. Doesn't fit in an IPS either, kind of an extension of WPS, but somewhat different. Then what about a Roth conversion strategy and tax considerations? Etc.

And then it struck me. What I needed was a "Financial Policy Statement". Where I can capture all things related to my personal finances where some level of discipline is required. I've used one for years now. I don't understand why would anybody do something narrower. At a high-level, it covers:
- top financial goals
- decision-making rules
- investment policies
- withdrawals and spending policies
- investment vehicles & conversions
- estate planning

I stay focused on policies requiring discipline in this document. I have a few TODO lists, various trackers, various tools to investigate financials, etc, but they are NOT part of my FPS. I do keep some key points about the rationale in favor (or disfavor) of a given policy in the FPS - ahem, my memory weakens, and I need reminders... I separate between 'hard policies' and 'soft policies', the former latter being of course more easily subject to change. I also keep track of a history of changes. At the end, I elected for a spreadsheet format, this made much easier to organize things in a two-dimensional format.

EDIT: I was reading my own post from Nov-17 and noticed an unfortunate typo ('former' instead of 'latter'). Fixed it!
Last edited by siamond on Thu Jul 11, 2019 8:45 pm, edited 1 time in total.

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by WoodSpinner » Mon Nov 13, 2017 10:33 am

siamond,

If you are comfortable with it, I would love some insights into your decision making rules. What are they? How did you structure them?

Thanks

joel

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by midareff » Mon Nov 13, 2017 10:52 am

Mine was an excel spreadsheet with annual projected investment savings, projected pension, projected SS and more., year by year. Started it about 15 years prior to retirement so near twenty years ago.

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by siamond » Mon Nov 13, 2017 1:06 pm

WoodSpinner wrote:
Mon Nov 13, 2017 10:33 am
If you are comfortable with it, I would love some insights into your decision making rules. What are they? How did you structure them?
Sure. It's quite simple, a process leveraging on my separation of hard decisions and soft decisions/proposals for a given theme:

- Soft decisions capture policies to enforce that are ok to change/tune as I see fit
- Soft decisions also capture proposals for changes and ideas for a mid-term future.
- Hard decisions capture policies where a very strict discipline has to be enforced, and changes need to deliberated at length

- Hard decision proposed change: enforce at least 6 months of slow chewing on it (use soft decision notes), preferably next Jan
- Record change proposals in soft decisions with a date and 'TBS' (To Be Studied), to time the 'slow chewing' period.
- Mark as 'TBD for 20xx' (To Be Discussed) possible ideas for longer term - no need to cast in stone for now, or analyze in depth.
- Keep a history (log) of changes AND non-decisions (rejecting a proposal)

I will readily confess that the 6 month period is quite hard to enforce, and I didn't always respect it. But the more experience I get, the more I see the wisdom of doing so. And hey, if this forces me to NOT do anything for at least 3 months, that's a good start! :wink:

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by BTDT » Mon Nov 13, 2017 1:48 pm

I modified my IPS to account for retirement changes. I guess I could now call it IPS/RPS but my better half would probably not appreciate another acronym. I'm more into the KISS principle anyway and try to avoid OCB :oops:
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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by 2pedals » Wed Jul 10, 2019 3:29 pm

WoodSpinner, Thank you so much.

After stumbling on a link to this thread, I really liked this idea. I have converted my IPS into a RPS using your template.
I believe this has helped me and my organize my retirement for me and my wife. I am sleeping better at night. I believe this thread should get more attention for folks in retirement.

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by WoodSpinner » Thu Jul 11, 2019 9:46 am

2pedals wrote:
Wed Jul 10, 2019 3:29 pm
WoodSpinner, Thank you so much.

After stumbling on a link to this thread, I really liked this idea. I have converted my IPS into a RPS using your template.
I believe this has helped me and my organize my retirement for me and my wife. I am sleeping better at night. I believe this thread should get more attention for folks in retirement.
So glad you found it helpful! It’s been a big asset for us as well. My wife and I update it yearly and have shared most of it with our daughter as well. Turned out to be a great tool for helping all of us.

WoodSpinner

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by AlohaBill » Thu Jul 11, 2019 10:07 am

Hi,
I use the Retirement Policy Statement developed at Morningstar by Christine Benz.
There is a template you can download. It is very simple to use and show my wife. Basically, I follow Mr. Larimore’s method of withdrawal. When I need money, I spend it. So far in two years, we have increased our portfolio by over $120000. Our withdrawals in the two years of retirement is under 3.5%.

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by WoodSpinner » Thu Jul 11, 2019 10:33 am

AlohaBill wrote:
Thu Jul 11, 2019 10:07 am
Hi,
I use the Retirement Policy Statement developed at Morningstar by Christine Benz.
There is a template you can download. It is very simple to use and show my wife. Basically, I follow Mr. Larimore’s method of withdrawal. When I need money, I spend it. So far in two years, we have increased our portfolio by over $120000. Our withdrawals in the two years of retirement is under 3.5%.
I started with Morningstar’s template and then shifted a bit to be more comprehensive. Used my wife’s and daughters questions as a starting point for adding content. Lastly, many of the threads on Bogleheads have helped me shape and refine the document. For instance I have a new section on Spending Levels that incorporates comparisons of the 4% rule, Time Value of Money and Variable Percentage Withdrawal.

WoodSpinner

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by 1955Chevy » Thu Jul 11, 2019 4:06 pm

siamond wrote:
Sun Nov 12, 2017 10:40 am
What I needed was a "Financial Policy Statement". Where I can capture all things related to my personal finances where some level of discipline is required.
Love it.
"Investment success accrues not so much to the brilliant as to the disciplined." | Bernstein

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by Zippy01 » Thu Jul 11, 2019 4:39 pm

I love this, thank you! It occurred to me that listing the existence of and whereabouts of PO boxes and safety deposit boxes, along with instructions on when those should be accessed might be helpful. I assume this info would be in your wills, but for times prior to death when a safety deposit box should be accessed and who has the authorization to do so would be good info to have in there.

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by Sandtrap » Thu Jul 11, 2019 5:08 pm

I'm retired. So, my IPS is my RPS. (2 in 1) :D
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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by WoodSpinner » Thu Jul 11, 2019 5:12 pm

Zippy01 wrote:
Thu Jul 11, 2019 4:39 pm
I love this, thank you! It occurred to me that listing the existence of and whereabouts of PO boxes and safety deposit boxes, along with instructions on when those should be accessed might be helpful. I assume this info would be in your wills, but for times prior to death when a safety deposit box should be accessed and who has the authorization to do so would be good info to have in there.
Willmaker has a great form it helps you fill out Instructions for Executor that is a great template for this type of information It really made me think and highlighted a number of things I hadn’t considered (e.g. my Kindle Books).

WoodSpinner

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by 2pedals » Thu Jul 11, 2019 8:29 pm

1955Chevy wrote:
Thu Jul 11, 2019 4:06 pm
siamond wrote:
Sun Nov 12, 2017 10:40 am
What I needed was a "Financial Policy Statement". Where I can capture all things related to my personal finances where some level of discipline is required.
Love it.
I really do love it. WoodSpinner has collected a lot of information for retirement planning and combined it with an IPS. I think of it as a "Retirement Policy and Planning Handbook". WoodSpinner's ideas on what to include are very clever. Without something like this I can see myself and DW losing focus over time. WoodSpinner's purpose of the document is written as follows.
Purpose of this Document:
This document is designed to help clearly lay-out our Retirement Plans, Strategies, and the Tools which will help us over the next 30 years. It is designed to be a living document which will need to be reviewed and revised as new laws are enacted or new challenges encountered that we haven’t anticipated. There are several important goals in developing this statement:

1. Provide clarity into some of the complexities of how Retirement is going to work.
2. Identify key gaps in our understanding that need to be addressed over time (e.g. how to select specific assets to invest in).
3. Assist my family in understanding our Retirement plans and prepare them to step in if they are needed.
4. Layout strategies for dealing with unusual situations like unanticipated major expenses and severe market downturns.
5. This is a written record of our intentions that can be formally reviewed and revised as needed.

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by is50xenough » Fri Jul 12, 2019 8:10 am

WoodSpinner wrote:
Wed Nov 08, 2017 11:04 am
As part of planning for retirement this year, I decided to build a Retirement Policy Statement (RPS) to document our retirement finances, cash-flows, and key strategies. Originally I was inspired by an article on Morningstar but this has quickly morphed into a much more extensive document.

This document is designed to also align with my Investment Policy Statement (IPS) as well as the

Some of the key advantages I found in putting this together include:
1. Insures my DW and I have alignment and a clear vision of our goals.
2. Provides documentation that describes the rational behind key decisions (e.g. take a pension rather than a lump sum) and what watchpoints (e.g. change in tax law), might cause us to re-think the decision.
3. Describes how bills will be paid, expected cash-flows, and other financial strategies needed to fund our retirement.
4. Becomes a vehicle my DW can use in case I pass early or loose my faculties.
5. Provides a framework that ensures you are well prepared to retire.

At this point I am looking for feedback on:
1. Do you see a value in building an RPS for yourself?
2. Suggestions for improving the template?
3. Anything missing?

Help me refine the template and make it even more useful for the Boglehead community.

Word - Model Retirement Policy Statement or
PDF- Model Retirement Policy Statement

Looking forward to your feedback!

WoodSpinner
Looks awesome. Just curious, why Roth conversions into separate accounts—is it so no IRS confusion on 5 year rules? If over 59 and ½ does it matter? Will you consolidate later?

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by WoodSpinner » Fri Jul 12, 2019 8:19 am

is50xenough wrote:
Fri Jul 12, 2019 8:10 am

Looks awesome. Just curious, why Roth conversions into separate accounts—is it so no IRS confusion on 5 year rules? If over 59 and ½ does it matter? Will you consolidate later?
This is an artifact from the change in TAX laws implemented by the TCJA. Under current law there is no reason to convert into separate accounts since it can NO Longer be recharachterized.

Glad you are finding it a helpful tool!

WoodSpinner

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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by mickeyd » Fri Jul 12, 2019 9:19 am

No matter if you call it an IPS or an RPS or an IPS/RPS or some other self-named device, the idea that you have documented what your well-thought out plan is that will give you a guide for your financial future is essential. Having a financial plan is necessary these days.
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Re: Retirement Policy Statement (RPS) -- Is anyone else using one?

Post by nedsaid » Fri Jul 12, 2019 9:26 am

Wow. This Retirement Policy Statement is a really good idea. It is a good tool to help put retirement planning into motion. The main flaw is that we all get older and there is the issue of cognitive decline. It is a great way to get the retirement and estate planning in motion. If I had large amounts of assets, I would probably have a low cost advisory service manage my portfolio for me. I would also have my paperwork like trust, will, durable power of attorney, health care directive all drawn up and ready to go. Make as easy as possible for your kids to handle all of this when the time comes.
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