Talk:Introduction to retirement spending models

Article Title
--ThePrune 09:26, 29 August 2011 (EDT) I am no longer happy with my originally proposed title for this article, "General models of retirement spending". I'm thinking that something like "Overview: models of retirement spending" or "General summary: models of retirement spending" better convey the actual purpose and content of the article. I'd be interested in hearing some other ideas before proceeding with the change.

My suggestion: "Introduction to retirement spending models" This page introduces the concepts with a brief overview.

I think your organization is getting a little out of sync. On this page, the simple and dual budget models are discussed in Budget models of retirement spending while the models which vary over time are not mentioned anywhere else (did you miss an article?).

I would list these below with a brief one sentence description, then point to the right place; e.g. Main article: Budget models of retirement spending. Or, just give a simple list.

For example, the replacement rate model introduction has too much detail and should be moved to Replacement rate models of retirement spending. Just keep a few brief sentences here. I'll give it a shot.

--LadyGeek 19:27, 29 August 2011 (EDT)


 * --ThePrune 23:15, 29 August 2011 (EDT) OK.  Time for me to say STOP, and let me explain my vision for each article in the series.  I have caused confusion by entering just parts of articles rather than completed articles.  I apologize, and ask for our patience!


 * Retirement Spending: This is what I intend to use as the article that contains 1-3 sentence summaries of all the other articles.  This article gets the reader oriented so that they can find which article to go to next for whatever information they seek.


 * Introduction to Retirement Spending Models (I like your name suggestion very much!): This article gives a broad overview of all types of retirement spending models. Each model is explained in a (from a Ph.D.'s warped perspective) summary fashion, with a "Strengths" and "Weaknesses" section.  Using this one article, the reader can make an intelligent decision as to which type of model they want to apply for they own situation.  Then they can go to the associated, detailed article to see exactly how to implement the model.
 * For example, it makes little sense to make the reader wade through detailed articles on Replacement Rates models, Budget models, and Time Varying spending models just to decide which one to use. The "Introduction" article makes it easier for them to decide.


 * Replacement Rate Models: all the details needed to intelligently implement this spending model.


 * Budget Models: almost all the details needed to intelligently implement this spending model (lacks medical cost details).


 * Medical Expenses:additional details needed to more accurately incorporate medical costs into a budget model. Also to include details on Long-Term care expenses.  (But if Long-Term care section gets to be too large, I'll break it into a separate article also.)
 * In the 6 week Retirement Planning class I teach, I've discovered that most people can't develop a budget model without me also spending some detailed time just talking about medical expenses in retirement. Besides, having this as a separate article means people who are just interested in medical costs can more easily access the information of interest.


 * Surveys of Retirement Spending: provides baseline data about actual retiree spending patterns. Most readers would not dig this deep.  Software developers and retirement planners would be helped by this information.


 * Inflation and Retirement Spending: covers the various ways that retirement inflation can be modeled. There are more variations than you might be aware of!


 * Bottom Line: I'm going to change the "Introduction" article back to my original content on Tuesday.  Then, after I finish filling in the last "Budget model" article section, I'll return and finish filling in the "Introduction" article according to my original vision.  Once it's finished, I'll fill in 1-3 sentence summaries in the "Retirement Spending" article.  With this much completed, you will be better able to judge whether my vision for the article series makes sense.  At that point, we can come back to discussing major content rearrangements.  Everyone's comments have been excellent so far.  So if folks then want to rearrange on a grand scale, so be it :-)


 * I rolled back the pages to your last edits --Blbarnitz 05:04, 30 August 2011 (EDT)

I was being proactive, since you liked my previous suggestions. If I was wrong, it is very easy to revert back. I'll continue to review the content, but keep within the confines of your outline.

The "undo" function, located to the right of each entry in the View History tab, reverts changes. It is also useful if you saved a page in error, which is too much trouble to fix as-is. You can "undo" from any revision to any other revision. Blbarnitz has just shown you two examples. --LadyGeek 07:19, 30 August 2011 (EDT)

Retirement spending risks
--ThePrune 14:04, 5 September 2011 (EDT) Need to add a sub-section (possibly in the Introduction) dealing with the uncertainties in retirement spending that might result from unplanned events. Examples of such unplanned events might include:
 * Supporting aged parents and/or adult children
 * Paying out-of-pocket for long-term medical care
 * Large spikes in inflation (as occurred in the late 70's)

Others are encouraged to make their own additions to the list of unplanned events that should be included.

Also needed are good references for ways that retirees can incorporate unplanned expenses into their retirement spending plans.

--LadyGeek 19:53, 6 September 2011 (EDT):
 * One or both spouses become disabled
 * One spouse passes away (if both pass, then the topic shifts to estate planning - not for this article)

These scenarios should be part of the retirement spending plan. Estimations of the impacts for each event need to be made. For example: If one person is disabled, do you need 2 cars (and the associated expenses)?

One way to incorporate these events is to plan for a "normal" retirement. Then, extend the budget for each of the above scenarios. In Excel, all you need to do is add some columns and copy the formulas across. Reduce each category by a percentage. For example, if one spouse is disabled, car expenses go to 50%.

Broken links
In External link maintenance: Journal of Financial Planning (Citations 27, 28) --LadyGeek 20:02, 16 February 2012 (CST)
 * http://spwfe.fpanet.org:10005/public/Unclassified%20Records/FPA%20Journal%20June%202005%20-%20Reality%20Retirement%20Planning_%20A%20New%20Paradigm%20for%20an%20Old%20Science.pdf
 * In Introduction to retirement spending models on 2011-12-21 04:43:14, Socket Error: 'A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond'
 * http://spwfe.fpanet.org:10005/public/Unclassified%20Records/FPA%20Journal%20March%202008%20-%20Economics'%20Approach%20to%20Financial%20Planning.pdf
 * In Introduction to retirement spending models on 2011-12-21 04:43:14, Socket Error: 'A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond'

I repaired both of the above broken links. Thanks for pointing them out! ThePrune 07:08, 17 February 2012 (CST)

Administrative
--LadyGeek 17:43, 8 September 2011 (EDT): The article appears to be getting a bit long. Consider splitting into 2 articles, with the division at Models of spending as retirement progresses. (We can look at splitting the article, if needed, after it's complete. --LadyGeek 17:56, 8 September 2011 (EDT))


 * --ThePrune 11:07, 10 September 2011 (EDT) I decided to split the article up right now. I was going to omit some significant details in the next section of this article.  By splitting now, I'll feel less constrained to omit these details in order to maintain a manageable article length.

The "See also" section listing the related pages is also getting long. It's probably better to only list articles not in the series, as the sidebar (right-side) duplicates this list. We could also put a template at the page bottom.

Redundant "See also" links removed, much better readability. --LadyGeek 21:09, 8 September 2011 (EDT)


 * I think readability would be improved if the Strengths and Weaknesses were put into a side-by-side table. It would shorten the article length and create a visual break between sections.


 * Using "Models of..." seems superfluous since the article is already about models. "Models of spending as retirement progresses" could be renamed to "Spending during retirement." "Models of initial retirement spending" could be renamed to "Spending when retirement starts". The sidebar menu could be shortened (displayed text, not changing the links).

--LadyGeek 16:19, 9 September 2011 (EDT)

I did the above (added tables, updated sidebar), but did not modify the section titles - in case anyone had a different idea. This is the best way to show changes - the edits can be reverted ("undo") if desired.

--LadyGeek 17:01, 9 September 2011 (EDT)

Introduction Section
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)

Specific Retirement Calculators
--ThePrune 16:30, 8 September 2011 (EDT) I have taken the approach of placing all the names of example retirement calculators into the numbered references. But I'm not really sure if this best serves the reader. After all, it takes a little work to click the reference link in order to see the specific calculators in the associated reference.

I can think of 2 alternatives: Add many small tables of example calculators into the text, or add a few large, organized tables of calculator examples into the External Links section. I'm neutral about these possibilities.

What do others think?

--LadyGeek 17:43, 8 September 2011 (EDT) Let's avoid duplication. The wiki already has a calculator page, most of these are already listed - Retirement calculators. Why don't we put everything in there? We can use these descriptions and do some clean-up. This would reduce the footnotes (there are a lot of them). Then just refer to Retirement calculators. I'll give it a shot.


 * Here is a test mock-up of a navigation box style table for an external links application. (One could modify,if desired, the definitional "headings" for greater accuracy, and we would need to find an appropriate "calculator" icon for the image; and we could fiddle with the style table formatting.