Retirement Income Journal
The information forum of the decumulation industry.

Putting men on the moon was easy, a NASA scientist once said. Bringing them home safely was hard. People have drawn similar comparisons between saving for retirement and spending in retirement.

As one advisor recently commented to the Money Management Institute, “Accumulation is like a tile puzzle. It’s difficult but you can figure it out. Decumulation is like a Rubik’s Cube. It’s very difficult to figure out.”

During accumulation, a household’s earning power and a long investment horizon help smooth out many economic shocks. It’s much harder, however, to deal with inflation, taxes, market volatility and poor health in retirement, when you’ve got finite or shrinking resources.

Wealthy retirees, of course, may never face decumulation per se. That is, they may not need to dip into principal. But most Americans won’t enjoy that luxury. Even for the so-called mass affluent, diligent retirement planning will be crucial.

Some financial services companies have adapted faster than others to the changing needs of their Boomer customers. In a recent whitepaper, the Money Management Institute identified firms that have embraced the decumulation challenge by creating what MMI calls Personal Retirement Income Solution Management (PRISM) tools.

Jack Sharry, chair of MMI’s Retirement Solutions Committee and an executive vice president at LifeYield, which makes a tax optimization tool for the decumulation phase, said it was time for someone to shed light on this trend.