Monday, October 14, 2013

Reading List for Class on Accumulation and Distribution

I'm in the final stages of putting together the syllabus for my class "Seminar in Accumulation and Distribution of Financial Assets" here at the American College. I thought I'd share my proposed reading list for the class, in case anyone has any last minute feedback.

Week 1:
Traditional Analyses of Appropriate Savings Rates for Retirement

  • Gustafson, Leland V., David J. Boldt, and Bruce M. Bird. 2005. “Determining the Saving Rate Necessary for a Comfortable Retirement.” Journal of Personal Finance 4, 3: 62-78.
  • Ibbotson, Roger, James Xiong, Robert P. Kreitler, Charles F. Kreitler, and Peng Chen. 2007. “National Savings Rate Guidelines for Individuals.” Journal of Financial Planning 20, 4 (April): 50-61.
  • Ervin, Danny M., Gregory K. Faulk, Joseph C. Smolira. 2009. “The Impact of Asset Allocation, Savings, and Retirement Horizons, Savings Rates, and Social Security Income in Retirement Planning: A Monte Carlo Analysis.” Financial Services Review 18, 313-331.

Week 2:
Asset Allocation in the Accumulation Phase

  • Booth, Laurence. “Asset Allocation: The Long View.” Chapter 12 in Retirement Income Redesigned (ed. by Harold Evensky and Deena Katz).
  • Schleef, Harold J., and Robert M. Eisinger. 2011. “Life-Cycle Funds: International Diversification, Reverse Glide Paths, and Portfolio Risk.” Journal of Financial Planning 24, 1 (January): 50-58.
  • Basu, Anup K., and Michael E. Drew. 2009. “Portfolio Size Effect in Retirement Accounts: What Does It Imply for Lifecycle Asset Allocation Funds?” Journal of Portfolio Management 35, 3 (Spring): 61–72.
  • Pfau, Wade D. 2011. “The Portfolio Size Effect and Lifecycle Asset Allocation Funds: A Different Perspective.” Journal of Portfolio Management 37, 3 (Spring): 44–53.
  • Pfau, Wade D. 2013. “The Lifetime Sequence of Returns Risk – A Retirement Planning Conundrum.” Unpublished Working Paper.

Week 3
Retirement Income: Goals, Risks and Tools

  • Society of Actuaries. 2011. “Managing Post-Retirement Risks: A Guide to Retirement Planning.” (October). Available from:
  • Milevsky, Moshe A., and Anna Abaimova. “Risk Management During Retirement.” Chapter 10 in Retirement Income Redesigned (ed. by Harold Evensky and Deena Katz).
  • Pfau, Wade D. 2013. “Analyzing an Income Guarantee Rider in a Retirement Portfolio.” Journal of Retirement 1, 1 (Summer): 100-109.
  • Gadenne, Francois. 2011. “2006-2011: An Update of RIIA’s 2006 ‘Founding’ White Paper.” Retirement Management Journal 1, 1 (Spring): 5-21.
  • Carey, H. “Rick”, and Jeffrey K. Dellinger. “Immediate Annuities Structure, Mechanics, and Value.” Chapter 19 in Retirement Income Redesigned (ed. by Harold Evensky and Deena Katz).

Week 4
Safe Withdrawal Rates

  • Bengen, William P. “Sustainable Withdrawals.” Chapter 13 in Retirement Income Redesigned (ed. by Harold Evensky and Deena Katz).
  • Pfau, Wade D. 2012. “Capital Market Expectations, Asset Allocation, and Safe Withdrawal Rates.” Journal of Financial Planning 25, 1 (January): 36-43.
  • Pfau, Wade D. 2011. “Safe Savings Rates: A New Approach to Retirement Planning over the Life Cycle.” Journal of Financial Planning 24, 5 (May): 42–50.
  • Kitces, Michael. “Practical Applications of 20 Years of Safe Withdrawal Rate Research.” The Kitces Report (March 2012).
  • Cooley, Philip L., Carl M. Hubbard, and Daniel T. Walz. 1998. “Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable.” American Association of Individual Investors Journal 20, 2 (February): 16–21.

Week 5
Transitioning from Accumulation to Decumulation

  • Pfau, Wade D. 2011. “Getting on Track for a Sustainable Retirement: A Reality Check on Savings and Work.” Journal of Financial Planning 24, 10 (October): 38-45.
  • Bernstein, William J. 2012. The Ages of the Investor: A Critical Look at Life-cycle Investing (Investing for Adults). Efficient Frontier Publications. [all except for the section: “Fama-French: The Alternative to Leverage Early”]
  • Zwecher, Michael J. 2010. Retirement Portfolios: Theory, Construction, and Management. Hoboken, NJ: John Wiley & Sons.   Chapters 1-7, 10, Appendix A
  • Pfau, Wade D. 2012. “Life-cycle Finance and the Dimensional Managed DC Pension.” Advisor Perspectives (May 22).

Week 6
Beyond Safe Withdrawal Rates, Part 1

  • Milevsky, Moshe A., and Huaxiong Huang. 2011. “Spending Retirement on Planet Vulcan: The Impact of Longevity Risk Aversion on Optimal Withdrawal Rates.” Financial Analysts Journal 67, 2 (March/April): 45–58.
  • Sun, Wei, and Anthony Webb. 2012. “Should Households Base Asset Decumulation Strategies on Required Minimum Distribution Tables?” Center for Retirement Research at Boston College Working Paper WP 2012-10 (April).
  • Scott, Jason S., and John G. Watson. 2013. “The Floor-Leverage Rule for Retirement.” Financial Analysts Journal 69, 5 (September/October): 45-60.
  • Nevins, Daniel. 2004. "Goals-Based Investing: Integrated Traditional and Behavioral Finance." Journal of Wealth Management 6, 4 (Spring): 8-23.

Week 7
Beyond Safe Withdrawal Rates, Part 2

  • Sexauer, Stephen C., Michael W. Peskin, and Daniel Cassidy. 2012. “Making Retirement Income Last a Lifetime.” Financial Analysts Journal 68, 1 (January/February): 74-84.
  • Blanchett, David, Maciej Kowara, and Peng Chen. 2012.  “Optimal Withdrawal Strategy for Retirement-Income Portfolios.” Retirement Management Journal 2, 3 (Fall): 7-20.
  • Pittman, Sam, and Rod Greenshields. 2012. “Adaptive Investing: A Responsive Approach to Managing Retirement Assets.” Retirement Management Journal 2, 3 (Fall): 45-54.
  • Fan, Yuan-An, Steve Murray, and Sam Pittman. 2013. “Optimizing Retirement Income: An Adaptive Approach based on Assets and Liabilities.” Journal of Retirement 1, 1 (Summer): 124-135.
  • Evensky, Harold. “Withdrawal Strategies: A Cash Flow Solution.” Chapter 11 in Retirement Income Redesigned (ed. by Harold Evensky and Deena Katz)

Week 8
Improved Financial Decision Making and Retirement Outcomes

  • Blanchett, David, and Paul Kaplan. 2012. “Alpha, Beta, and Now… Gamma.” Morningstar Investment Management Working Paper (September 8).
  • Martin, Terrance, and Michael Finke. 2012. “Planning for Retirement.” SSRN Working Paper #2195138 (December 31).
  • Webb, Anthony. 2009. “Providing Income for a Lifetime: Bridging the Gap between Academic Research and Practical Advice.” AARP Public Policy Institute Working Paper 2009-11 (June).
  • Munnell, Alicia H., Alex Golub-Sass, and Nadia S. Karamcheva. 2013. “Understanding Unusual Social Security Claiming Strategies.” Journal of Financial Planning 26, 8 (August): 40-50.

Week 9
Complete Picture of Retirement Income

  • Pfau, Wade D. 2012. “Choosing a Retirement Income Strategy: A New Evaluation Framework.” Retirement Management Journal 2, 3 (Fall): 33–44.
  • Pfau, Wade D. 2013. “A Broader Framework for Determining an Efficient Frontier for Retirement Income" Journal of Financial Planning 26, 2 (February): 44-51.
  • Malhotra, Manish. 2012. “A Framework for Finding an Appropriate Retirement Income Strategy.” Journal of Financial Planning 25, 8 (August): 50–60.
  • Video introduction to Income Discovery by Manish Malhotra
  • Pfau, Wade D. 2012. “Choosing a Retirement Income Strategy: Outcome Measures and Best Practices.” Retirement Management Journal 2, 3 (Fall): 23–32.


  1. Here's some feedback: what a great list! I see I have a few gaps to fill in my reading. I'd include the Scott/Sharpe paper, "A 4% Rule--At What Cost?", but that's just a personal favorite.

    1. Dirk, thank you! You are right about the importance of the article you suggested. My thinking was that the new Scott/Watson article in Week 6 covers some of the same ground and extends that earlier work in a direction which is more easy to implement in the real world. But thank you, I will have another look at the Scott/Sharpe article.

  2. Hi Wade. I agree with Dirk - some good stuff that I've missed in the above to add to my reading list. Obviously self-serving, but maybe my safe withdrawal rate overview article that was published in the Journal of Financial Planning might provide a good overview for that section of the course as well as my book "How Much Money Do I Need to Retire" for the asset accumulation portion. Looking forward to reading what is on the list that I previously missed. Thanks for sharing.

    1. Todd, thanks. Actually, you are right about your article. It covers same of the same ground as the Michael Kitces review article, but you and he conclude just about the opposite from one another on most of the key underlying points. That can spark some good debate. I'm thinking that students will be exposed to some of the main messages of your work through the "safe savings rates" article, but especially in later reconfigurations if I can add to the reading list, then your article certainly merits addition. Thank you.

      I should add that both Dirk and you mentioned articles which are part of a short list of articles which just missed making the final cut on the syllabus as I tried to keep the number of readings manageable. I will think about adding a recommended reading list as well.

  3. What is the best way for to access the referenced journal articles for those of us not working in academia?


    1. Hi,

      You might be able to get into a local public university library.

      Or, try googling the article title. Many of these articles will have free pre-publication "working paper" versions available from other sources. Also, the Journal of Financial Planning and the Retirement Management Journal do provide the articles for free at their websites.

  4. Great list Wade and thanks for sharing it!

    On the accumulation side, have you come across any research suggesting guidelines for saving amounts/percentages for employees who also participate in a defined benefit plan? I see lots of research for defined contribution participants (10-20%, depending on age, circumstances, etc.), but I haven't really seen anything for folks who are in DB plans. Thanks in advance!

    1. Mike,

      It all comes down to how much of your salary do you hope to replace with withdrawals from your financial assets. DB pensions will mean that you have more income available from sources outside your financial portfolio, which reduce the need for withdrawals from your portfolio, and therefore reduce the savings rate you need to use, everything else being the same. The appropriate savings rate is related to how much of your income you are hoping to replace with those withdrawals. At an extreme, if your DB pension is so generous that it will cover all of your retirement needs, then you don't have much need for other savings beyond having a contingency/emergency fund to deal with unexpected events.

    2. Well, yes, but ... It's easy to say that benefits from DB plans are more predictable than from DC plans, and that's true if your employer does not change its DB plan between now and your retirement. On the other hand, if you are 30 years old and you rely entirely on a DB plan, what will you do if your employers changes it (in the worst case, stops contributing entirely and freezes benefits) when you are 50? It may be very difficult to take evasive action then. And, of course, some companies themselves don't survive. There's no formula here, but I'd be thinking about these possibilities.

    3. Thanks again Wade. I was just wondering if there were any researched guidelines that say, if you expect your DB plan to replace 60% of your retirement income, then you should save X% in your DC plan. Or if you expect the DB plan to replace 40% of your retirement income, then you should save Y% in your DC plan. And so on.

    4. Anonymous: Yes, it is important to think about these possibilities. This concern would suggest saving more. Another reason to save more is the possibility of job loss or forced early retirement, neither of which may be part of one's financial plan.


      I don't know of any guidelines. On the one hand, what you really want to know is how much you need to spend from our portfolio after accounting for these other income sources (William Bernstein calls this the residual income need), and then you can calculate what you need to save to accomplish that. On the other hand, as more of your goal is met by the DB pension (and you believe it is safe), your risk capacity increases which can translate into spending more or investing more aggressively. So the answer to this does still depend on one's aversion to outliving assets, and that will make it harder to generalize advice.