Retire With Style

Episode 171: Unlocking the Secrets of Bond Laddering

In this episode of Retire with Style, hosts Alex Murguia and Wade Pfau are joined by Nate Conrad from Lifex Funds to discuss the innovative approach to retirement income through bond ladders. The conversation explores the evolution of Lifex, the differences between traditional bond funds and bond ladders, and the design of Lifex ETFs aimed at providing consistent income for retirees. They delve into the behavioral aspects of investing in bonds, the practical applications of bond ladders in retirement planning, and the complexities involved in constructing a bond ladder. The episode emphasizes the importance of aligning investment strategies with retirement income needs and the benefits of using Lifex's products for a more stable financial future. They discuss the importance of simplifying investment processes to enhance accessibility for investors. The conversation also touches on income distribution strategies, emphasizing the benefits of front-loading income and the tax implications of different spending methods. They end the episode with listener questions that provide practical insights into managing surplus wealth and the appropriate investment strategies for different funding ratios. Listen now to learn more!
 
Takeaways
Lifex has evolved to focus on retirement income through bond ladders.
Bond ladders provide predictable income compared to traditional bond funds.
The design of Lifex ETFs allows for monthly distributions to match spending needs.
Lifex ETFs are structured to adapt to the spending patterns of retirees.
The importance of managing long-term bond investments for retirement planning.
Constructing a bond ladder manually can be complex and time-consuming.
Using Lifex products simplifies the bond laddering process for investors.
Retirement income strategies should prioritize stability and predictability. Simplifying investment strategies can lead to better adoption.
Bond laddering can provide more predictable income than bond funds.
Using a bond ladder can allow for higher spending rates in retirement.
Surplus wealth can be invested more aggressively once basic needs are met.
Chapters
00:00 Introduction to Retirement Income Bond Ladders02:51 The Evolution of Lifex and Its Offerings06:09 Understanding Bond Ladders vs. Bond Funds09:11 Designing Lifex ETFs for Retirement Income12:01 Managing Long-Term Bond Investments15:06 Behavioral Aspects of Bond Investing18:06 Practical Applications of Bond Ladders in Retirement20:56 The Complexity of Building a Bond Ladder24:58 The Importance of Simplifying Investment Strategies29:51 Understanding Bond Laddering vs. Bond Funds36:30 Exploring Income Distribution Strategies41:13 Listener Questions and Practical Applications
 
Links
Wade will be at the Dallas MoneyShow, April 4-6. He will speak Sunday morning April 6 on Retirement Styleshttps://www.mmsdallas.com/speakers/1adf58d0d50547b0981fad3b07614de4/wade-pfau/?scode=064748
Learn more about the LifeX funds: https://www.lifexfunds.com/
Click here to watch this episode on YouTube: https://youtu.be/B_0xtHX1Hzc?si=x5ArQFSNEoA0RGfV
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2025! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/
This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

Episode 170: The Importance of Your Planning Assumptions Part 2

Welcome Back! In this episode, Alex, Wade and Brian dive into the complexities of financial planning, focusing on return assumptions, the importance of a living financial plan, and the methodologies behind capital market assumptions. They discuss the balance between spending and saving in retirement, the relevance of the 4% rule, and practical recommendations for effective financial planning. The conversation emphasizes the need for stress testing and understanding the underlying assumptions in financial models to ensure realistic and effective planning. Listen now to learn more!
 
Takeaways
Return assumptions can be based on historical or expected returns.
The financial plan should be treated as a living document that evolves over time.
Methodologies for capital market assumptions can vary significantly between firms.
The 4% rule is less relevant in modern financial planning than it used to be.
Stress testing financial plans helps to understand potential outcomes and risks.
Communication with clients about their financial goals is essential.
Understanding the math behind financial planning is as important as the goals themselves.
Advisors should guide clients in making informed decisions about spending and saving.
Chapters
00:00 Historical vs. Expected Returns in Planning04:14 Building Capital Market Assumptions07:15 Balancing Lifestyle and Financial Planning11:01 Understanding Spending Behavior in Retirement13:36 The Relevance of the 4% Rule17:26 Practical Recommendations for Financial Planning
 
Links
Click here to watch this episode on YouTube: https://youtu.be/R1dNHo3BDNA?si=RiNVF21TG9Zh4Npf
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2025! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/
This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

Episode 169: The Importance of Your Financial Planning Assumptions: Part 1

In this episode, Alex and Wade are joined by Brian Bass from McLean Asset Management to discuss the complexities of financial planning assumptions, particularly focusing on Monte Carlo simulations and their implications for success rates in retirement planning. They discuss how different advisors may present varying success rates based on their underlying assumptions, emphasizing the importance of understanding them for consumers. Key topics include the significance of capital market assumptions, the magnitude of failure in financial plans, and the necessity for transparency and communication between advisors and clients. The conversation aims to equip listeners with the knowledge to critically evaluate financial plans and ask the right questions when consulting with advisors. Listen now to learn more!
Takeaways
Consumers often lack awareness of the assumptions behind financial plans.
Monte Carlo simulations are a common tool in financial planning.
Success rates can be misleading without understanding underlying assumptions.
Small changes in return assumptions can significantly impact success rates.
Transparency in financial planning is crucial for informed decision-making.
Clients should ask advisors about the inputs used in their financial plans.
Different advisors may use varying assumptions leading to different outcomes.
Understanding capital market assumptions is key to evaluating financial plans.
Effective communication of financial concepts is essential for client understanding.
Chapters
00:00 Introduction to Financial Planning Assumptions02:18 Understanding Monte Carlo Simulations04:16 The Importance of Assumptions in Financial Planning06:21 Defining Success Rates in Financial Plans09:32 Magnitude of Failure vs. Success Rates10:39 Capital Market Assumptions Explained14:32 The Role of Returns and Volatility15:19 Communicating Complex Concepts to Clients18:29 The Impact of Long-Term Care on Financial Plans21:33 Key Questions for Consumers to Ask Advisors23:24 The Sensitivity of Return Assumptions
 
Links
Have a question about your financial plan? Schedule a 15-minute call with Jason Rizkallah from McLean Asset Management: https://calendly.com/jason-rizkallah/mclean-asset-management-introduction-call
Did you miss the Challenge? Join the Waitlist to be the first one notified when registration is open for the next session of the Retirement Income Challenge: risaprofile.com/podcast 
Click here to watch this episode on YouTube: https://youtu.be/7Cn0DUxIpvs
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2025! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/
This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips
 

Episode 168: Funded Ratio vs. Monte Carlo: Which is Better?

In this episode of 'Retire with Style', hosts Alex Murguia and Wade Pfau discuss the importance of understanding the funded ratio in retirement planning. They explore how the funded ratio compares to Monte Carlo simulations, the significance of present value in assessing retirement income, and the implications of conservative return assumptions. The conversation emphasizes the need for a solid financial plan and the upcoming retirement income challenge designed to help participants create their financial strategies. They also discuss the differences between funded ratios and Monte Carlo simulations in retirement planning. They emphasize the simplicity and intuitiveness of funded ratios, which allow individuals to easily understand their financial status. The discussion also covers the importance of variable spending strategies, the complexities of tax calculations, and how to analyze essential versus discretionary expenses. They address listener questions about Roth conversions and the challenges of retirement planning, advocating for a shift towards funded ratios as a more reliable tool for assessing retirement readiness. Listen now to learn more!
 
Takeaways
The funded ratio helps assess if you have enough assets to cover retirement liabilities.
Monte Carlo simulations and funded ratios approach retirement planning from different angles.
Present value calculations are crucial for understanding future income streams.
The funded ratio is a powerful tool used by pension funds and can be applied to individual retirement planning.
The funded ratio can provide a clearer picture of retirement funding status than Monte Carlo simulations.
Future earnings can be included in the funded ratio assessment.
The choice of discount rate can significantly impact the funded ratio outcome.
It's important to know the difference between current value and present value in retirement planning. The funded ratio is a more intuitive approach than Monte Carlo simulations.
Variable spending strategies can be effectively modeled with Monte Carlo.
Understanding essential vs. discretionary expenses is crucial for retirement planning.
Roth conversions can be beneficial even when working, but require careful consideration.
The financial planning profession has largely favored Monte Carlo methods.
 
Chapters
00:00 Introduction and Upcoming Events02:58 Understanding the Funded Ratio10:30 Present Value and Retirement Planning12:23 Conservative Return Assumptions17:48 Monte Carlo vs. Funded Ratio20:34 Understanding Funded Ratios vs. Monte Carlo Simulations25:22 The Role of Monte Carlo in Variable Spending Strategies27:49 Gathering Information for Funded Ratio Calculations30:11 Analyzing Funded Ratios for Essential vs. Discretionary Expenses33:53 The Shift from Monte Carlo to Funded Ratios39:54 Listener Questions: Roth Conversions and Retirement Planning
 
Links
Register to attend Retirement Researcher’s FREE 4-Day Retirement Income Challenge on March 10-13th from 12:00 – 2:00 PM ET each day: https://risaprofile.com/podcast
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2025! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/
This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

Episode 167: Navigating Retirement Goals: The Four L's

In this episode of 'Retire with Style', hosts Alex Murguia and Wade Pfau delve into the intricacies of financial planning for retirement. They introduce the concept of a financial planning framework, emphasizing the importance of understanding one's goals, risks, and the alignment of assets. The discussion covers the Retirement Income Challenge, the Retirement Income Optimization Map, and the four key goals of retirement: longevity, lifestyle, legacy, and liquidity. They also explore the various types of income sources, the significance of a diversified portfolio, and how to reposition assets to meet retirement objectives. The episode concludes with a listener question about the Social Security Delay Bridge strategy. Listen now to learn more!
 
Takeaways
Financial planning is essential for retirement success.
The Retirement Income Optimization Map helps visualize financial goals.
Understanding the four L's of retirement is crucial: longevity, lifestyle, legacy, liquidity.
Identifying retirement risks can guide financial decisions.
Reliable income sources are vital for covering essential expenses.
A diversified portfolio can fund discretionary spending and legacy goals.
Reserves are important for managing unexpected expenses in retirement.
Aligning goals with assets is key to effective financial planning.
The funded ratio helps assess retirement preparedness.
Cash can be a strategic resource for delaying Social Security benefits.
 
Chapters
00:00 Introduction to Financial Planning Framework03:08 Retirement Income Challenge Overview06:03 Understanding the Retirement Income Optimization Map09:06 Defining Goals: The Four L's of Retirement12:00 Identifying Retirement Risks15:04 Aligning Goals with Assets18:03 Exploring Reliable Income Sources20:59 Diversified Portfolio and Reserves23:48 Repositioning Assets for Retirement Goals26:58 Listener Question: Social Security Delay Bridge
 
Links
Register to attend Retirement Researcher’s FREE 4-Day Retirement Income Challenge on March 10-13th from 12:00 – 2:00 PM ET each day: https://risaprofile.com/podcast
Click here to download the RIO Map mentioned in today's episode: https://Retirement-Researcher.ontralink.com/tl/504
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2025! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/
This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips
 
 

Episode 166: Mastering Your Financial Future: A Framework for Success

In this episode of 'Retire with Style', Wade Pfau and Alex Murguia discuss the importance of having a structured financial planning framework, especially in the context of retirement. They explore the psychological aspects of financial planning, including the need for a positive mindset and the impact of behavioral biases on investment decisions. The conversation emphasizes the significance of a systematic approach to financial planning, including techniques like backcasting and considering one's future self. They also address listener feedback regarding Medicare Advantage plans, highlighting the importance of thorough research in making informed decisions about healthcare options in retirement. Listen now to learn more!
 
Takeaways
A structured financial planning framework is essential for retirement.
Behavioral biases can significantly impact investment decisions.
The financial planning process helps mitigate biases and provides clarity.
Backcasting is a valuable technique for setting financial goals.
Considering your future self can enhance decision-making.
Medicare Advantage plans require careful consideration and research.
A financial plan serves as a guide during stressful times.
Chapters
00:00 Introduction to Financial Planning Framework03:00 Mindset and Psychological Preparedness for Financial Planning06:02 Understanding Behavioral Biases in Investing12:10 The Importance of a Structured Financial Planning Process17:53 Backcasting and Future Self in Financial Planning24:12 Listener Feedback and Medicare Advantage Discussion
 
Links
Purchase access to Wade's Retirement Researcher Academy Workshop, Using Tax Maps to Enhance Tax Planning Decisions! Sign up now for one-time fee of $99 to attend the Workshop live on 2/19/25 and have on-demand access to the recording: https://Retirement-Researcher.ontralink.com/tl/500
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2025! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/
Register to attend Retirement Researcher's FREE 4-Day Retirement Income Challenge on March 10-13th from 12:00 - 2:00 PM ET each day: https://risaprofile.com/podcast
This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

Episode 165: Tax Planning Essentials for Retirees

In this episode of 'Retire With Style', hosts Alex Murguia and Wade Pfau delve into the intricacies of tax planning for retirement. They introduce the Retirement Income Challenge, discuss the importance of understanding tax impacts on retirement income, and explore strategies such as Roth conversions and gains harvesting. The conversation also covers the evaluation of 401k versus Roth 401k contributions, maximizing charitable contributions through Qualified Charitable Distributions (QCDs), and addressing listener questions, providing valuable insights for effective retirement planning. Listen now to learn more!
 
Takeaways
The Retirement Income Challenge helps participants assess their retirement readiness.
Tax planning is crucial for maximizing retirement income.
Roth conversions can be beneficial, but gains harvesting at 0% tax rate is also a viable strategy.
Understanding the tax implications of income sources is essential for retirees.
Qualified Charitable Distributions (QCDs) can significantly reduce tax bills for charitable donations.
The TaxMAT calculator workshop will provide practical tools for tax planning.
Evaluating 401k versus Roth 401k contributions requires understanding long-term tax impacts.
Medical deductions can be affected by income levels and tax planning decisions.
Effective tax planning can help avoid higher tax brackets in retirement.
Engaging with listeners through questions enhances the podcast experience.
 
Chapters
00:00 Introduction to Retirement Income Challenge02:58 Exploring Tax Planning Strategies05:55 Understanding Tax Impacts on Retirement Income09:11 Roth Conversions vs. Gains Harvesting12:02 Evaluating 401k vs. Roth 401k Contributions14:51 Maximizing Charitable Contributions and QCDs27:46 Listener Questions and Wrap-Up
 
Links
Purchase access to Wade's Retirement Researcher Academy Workshop, Using Tax Maps to Enhance Tax Planning Decisions! Sign up now for one-time fee of $99 to attend the Workshop live on 2/19/25 and have on-demand access to the recording: https://Retirement-Researcher.ontralink.com/tl/500
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2025! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/
Register to attend Retirement Researcher's FREE 4-Day Retirement Income Challenge on March 10-13th from 12:00 - 2:00 PM ET each day: https://risaprofile.com/podcast 
This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

Episode 164: Investment Insights: What 2024 Taught Us

In this episode, Wade Pfau and Alex Murguia review 2024, focusing on the discrepancies between market predictions and actual outcomes. They discuss the impact of prognostications on investment decisions and highlight the unpredictability of markets, emphasizing the importance of a long-term perspective in financial planning. Their conversation discusses the complexities of investing, emphasizing the futility of forecasting market trends and the importance of capturing market returns. They explore various investment strategies, including the significance of risk tolerance, the role of international investing, and the ongoing debate between value and growth stocks. The discussion highlights the necessity of diversification and maintaining a long-term perspective in investment decisions, especially in light of recent market performances and economic indicators. Listen now to learn more!
 
Takeaways
The importance of learning from past market predictions.
Prognostications can significantly influence investment decisions.
Historical performance of the S&P 500 shows the unpredictability of forecasts.
Financial education often contradicts the reality of market forecasting.
A historical average return may be a more reliable guide than expert forecasts. Successful investing doesn't rely on forecasting.
Discipline in capturing market returns leads to better long-term outcomes.
International investing still holds value despite recent underperformance.
Value stocks have not fundamentally deteriorated despite recent trends.
Diversification across asset classes is crucial for risk management.
Recent market highs do not guarantee future downturns.
Chapters
00:00 Year in Review: Lessons for 202507:34 Prognostications and Market Predictions18:07 The Unpredictability of Markets19:20 The Fallacy of Forecasting in Investing20:31 The Importance of Capturing Market Returns22:20 Risk Tolerance and Investment Strategies25:22 Market Trends and Economic Indicators28:13 The Role of International Investing32:28 Understanding Value vs. Growth Investing36:37 The Future of Small Cap and Value Stocks48:37 Conclusion: Diversification and Long-Term Outlook
 
Links
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2025! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 
This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

Episode 163: 2025 Retirement Planning Guidebook Updates

In this episode of 'Retire with Style', hosts Alex Murguia and Wade Pfau discuss significant updates in retirement planning for 2025, including changes to Medicare Part D, Social Security benefits, required minimum distributions (RMDs), and new catch-up contribution limits. They also explore the implications of inflation adjustments on qualified charitable distributions, longevity annuities, and the impact of increased real interest rates on retirement funding. The episode concludes with an announcement of an upcoming webinar focused on retirement spending strategies. Listen now to learn more!
Takeaways
The new $2,000 cap on out-of-pocket spending under Medicare Part D simplifies healthcare cost planning.
Elimination of the windfall elimination provision enhances Social Security benefits for certain retirees.
Clarified RMD rules for inherited IRAs require annual distributions for non-spouse beneficiaries after the owner's required beginning date.
Catch-up contributions for those aged 60-63 have increased, allowing for greater retirement savings.
Qualified charitable distributions (QCDs) have increased to $108,000, providing tax benefits for charitable giving.
Real interest rate assumptions have improved, making it easier to meet retirement funding goals.
The funded status of retirement plans is positively impacted by higher interest rates, reducing future liabilities.
The upcoming webinar will address how much retirees can spend based on updated financial planning strategies.
Retirees should adjust their financial plans to incorporate these significant 2025 updates.
Understanding these changes is crucial for effective retirement planning and maximizing benefits.
Chapters
00:00 Introduction and Updates03:37 Medicare Part D Changes07:50 Social Security Updates12:32 Required Minimum Distributions (RMDs) Clarification17:46 Catch-Up Contributions for Retirement Plans20:09 Qualified Charitable Distributions and Longevity Annuities23:55 Interest Rate Assumptions and Retirement Planning29:07 Webinar Announcement and Financial Planning Adjustments34:08 Conclusion and Future Plans
Links
Want to know more about Wade's updated Retirement Planning Guidebook? Register to attend Retirement Researcher's FREE Webinar, "How Much Do I Need to Retire?" hosted by Wade Pfau on Feb. 4th, 2025 at 2PM ET. Click to register and reserve your spot today: risaprofile.com/podcast 
To celebrate the latest update of the Retirement Planning Guidebook, we are hosting a GIVEAWAY! Enter for your chance to win a signed copy of the 2025 Revised  - Retirement Planning Guidebook and a Retirement Researcher T-Shirt! There will be 3 separate winners. The giveaway closes on February 4th. https://bit.ly/40VlPqp
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2025! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 
This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

Episode 162: Retire with Style Live (not really) Q&A: Part 6

In this episode of 'Retire with Style', hosts Wade Pfau and Alex Murguia, are joined by Jason Rizkallah from McLean Asset Management. They continue answering your critical questions surrounding retirement planning, focusing on the nuances of choosing between lump sum and annuity options and asset allocation strategies for retirees. They explore the implications of having reliable income sources like pensions and Social Security, and how these can influence investment strategies. The conversation emphasizes the importance of understanding personal risk tolerance and the unique circumstances of each retiree when making financial decisions. This conversation delves into the complexities of retirement planning, focusing on guaranteed income sources, the implications of the 4% rule, and the nuances of liquidity in retirement funds. The discussion also covers the role of the Pension Benefit Guarantee Corporation, strategies for deciding when to start annuities, and the considerations surrounding frozen pensions and lump sum options. The importance of viewing these decisions within the broader context of an individual's financial plan is emphasized throughout. Listen now to learn more!
 
Takeaways
Defined benefit pensions are becoming rare but still relevant in certain areas.
Choosing between a lump sum and an annuity requires careful consideration of personal financial goals.
Reliable income sources can allow for more aggressive investment strategies in retirement.
Pensions and Social Security can be viewed as bond-like income streams.
The Retirement Income Style Awareness (RISA) tool can help identify personal preferences for retirement income.
Market downturns can significantly impact retirement plans, highlighting the need for careful risk management.
Legacy considerations may influence investment strategies, but they are often secondary to ensuring a successful retirement. Guaranteed income can influence asset allocation decisions.
Understanding liquidity is crucial for effective retirement planning.
The Pension Benefit Guarantee Corporation can alter pension benefits.
Frozen pensions may limit future benefits and require careful consideration.
Lump sum options can provide flexibility but come with risks.
Pension contributions can be counted as part of overall savings.
Retirement decisions should be made in the context of a comprehensive financial plan.
Chapters
00:00 Introduction to the Q&A Episode04:57 Lump Sum vs. Annuity: Key Considerations12:09 Asset Allocation: Stocks vs. Bonds in Retirement22:53 Understanding Guaranteed Income and Asset Allocation23:39 Evaluating the 4% Rule and Pension Value25:23 Liquidity: Technical vs. True Liquidity in Retirement29:11 Pension Benefit Guarantee Corporation: Implications for Retirees32:34 Deciding When to Start Your Annuity36:43 Navigating Frozen Pensions and Lump Sum Decisions41:53 Counting Pension Contributions Towards Savings Rate
 
 
Links
Want to find out your personalized retirement income style? Click here to take a free RISA: https://risaprofile.com/style/
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2025! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 
This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”