7/17/2014

This columnist approaches client retirement planning based on how much the retiree will spend each year, given expected returns and inflation and factoring in worst-case scenarios. Here, he describes his annual available-spend methodology, which involves six steps: assessing spending needs, analyzing sources and types of income, computing base-case annual available spend, factoring in negative and worst-case scenarios, adjusting for market value changes and periodically reviewing the scenario with the client.

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