Talk:Introduction to retirement spending models

I think this section could be worded better, as the titles mask the intent of the content. My suggestions below- incorporate, modify, or reject as desired.

(Excluded topics is changed to Safe withdrawal rate.)
 * I have seen many forum topics discuss the Trinity Study and Safe Withdrawal Rate, Maximum Withdrawal Rate, etc. so I think the reader will be more familiar with this approach first. Then, introduce the spending models.
 * Inflation needs to be highlighted, it's very important and should stand on its own.
 * It's not calculators, but the software model used to create the calculators. I updated / reworded a citation, as the sentence came to no conclusion and to be part of the footnote instead. Some comments removed in the second paragraph - I didn't think statements about software developers was relevant.
 * Formatting cleanup for the classification list

Safe withdrawal rate
Many studies on retirement spending start with an estimate of future retirement savings and then estimate the spending that might be achievable in retirement. Such studies are often especially concerned with estimating the maximum spending that won’t lead to premature depletion of personal savings, known as the Safe Withdrawal Rate. These models treat the maximum amount of savings as an independent variable; meaning the amount of spending is adjusted so the savings last as long as planned.

This article series works from the other side of the equation and treats retirement spending as the independent variable in the retirement planning process. The future retiree first develops an estimate of their desired spending in retirement. From there, the planning process makes assumptions about longevity, inflation and investment returns; and then estimates the future savings required to potentially sustain that retirement spending.

Inflation
The effects of inflation on retirement spending are also excluded from this discussion. This is not meant to imply that inflation is an unimportant consideration. Just the opposite, inflation is probably the retiree’s worst enemy!  But the majority of retirement planning approaches treat inflation as a independent adjustable variable. In doing so, they separate nominal retirement spending into two components: real spending, and inflation adjustments. This article follows the same approach. Inflation adjustments are covered in the wiki here.

Retirement calculator models
There is a strong connection between retirement spending models and retirement planning calculators. Most software used for retirement planning, whether explicitly or implicitly, is written assuming some model of retirement spending. The adjustable options included in the software reflect the choice of spending model. It is an unfortunate fact that some retirement calculators have great strengths in many aspects of their design, yet are needlessly weak in how they incorporate retirement expenses. The usefulness of retirement planning software will be limited by its least realistic assumption. It makes little sense to develop retirement software having numerous investment type choices along with a detailed Monte Carlo treatment of potential future returns, if the real retirement spending is estimated using only a simple replacement rate model.

Model classifications
Having a classification system for retirement spending models is useful because it emphasizes similarities and differences. In this article the following classification will be used to organize retirement spending models:

Models of initial retirement spending
 * Replacement rate models
 * Simple budgeting models

Models of retirement spending changes over time
 * Constant (real) spending models
 * Age-varying spending models
 * Investment return-dependent spending models
 * Complex budgeting models
 * Life Cycle models

(End of comments. Put references here to avoid cite errors) --LadyGeek 21:31, 24 August 2011 (EDT)

--ThePrune 22:24, 24 August 2011 (EDT) ''LadyGeek, I liked all your suggestions and incorproated them into the Introduction section of the Wiki. As you may have noticed, I'm trying to speed up the rate of writing and text entry. But inevitably this leads to less clarity. So feel free to make your changes directly into the Wiki. If it's unclear to you, it'll be unlcear to everyone (but me)''.


 * I put content in the talk page (this one) when I'm unsure if my updates 1) are correct or 2) may change the author's intent. In this case, it was better to ask first. Further corrections will be made directly in the text (unless I have a question). --LadyGeek 18:17, 25 August 2011 (EDT)

''When you get a chance, read through the section on Replacement rate models. My goals are to (1) condense the larger, separate wiki down to just the key points, and (2) make some "strengths and weaknesses" statements so that the reader comes away with a balanced perspective of that model. '''In your opinion, am I achieving my goals? If not, what do you find "unsatisfying" about the section?'.


 * I think you mean instead "(1) summarize the replacement models to just the key points, and..." I'll try to answer your questions, but post in the Replacement rate models of retirement spending Discussion tab. --LadyGeek 18:17, 25 August 2011 (EDT)