Problems in the Financial Planning Field
Dangerously Flawed Return Models
Indefensibly optimistic return expectations
Assuming historical correlations between asset classes will persist into the future
Using stationary distributions to model returns
Pinning the blame on the tail
Deprecating the Best Safe Alternative
TIPS not treated as a generally recognized asset class
Unrealistic Modeling of Retirement Budgets
Assuming that retirees would keep their retirement budgets fixed even if outsized growth enabled them to spend far more
Largely Meaningless Simulation Outcomes
Illustrating how well a financial plan will help you die wealthy rather than different simulation trials of a variable retirement spending plan
No comparison to TIPS as a baseline
Risk measures not actuarially adjusted
The Pension Protection Act of 2006
Favors flawed return models
Forbids calling attention to TIPS
The 4% Safe Withdrawal Rate (SWR) Rule
Live poor so you can die rich!