Last year, my colleague Alex Murguia and I spent considerable time developing and testing a Retirement Income Optimization (RIO) Map™ for commercial use at McLean Asset Management, where I serve as the Director of Retirement Research.
The starting point for this process is to understand one’s financial goals for retirement, which we have summarized as the “4 L’s of Retirement.” These goals are as follows:
First, longevity goals center on the lifetime sustainability of the core or essential expenses in retirement. These goals largely relate to housing, health care, basic living expenses, and maintaining a basic level of financial independence without becoming a burden to others.
Next, lifestyle goals relate to how you want to live your life and maintain your desired overall standard of living in retirement. Components of lifestyle may be a bit more discretionary in nature, including items such as travel and leisure, self-improvement activities, social engagement, and helping with financial needs such as…