In the previous article, we discussed how your retirement income style provides the personal context needed to help point you in the right direction regarding your retirement income approach. The Retirement Income Style Awareness™ (RISA) quantifies the decision-making factors you are implicitly using when you consider various retirement solutions. It then measures your style preferences against the various retirement income solutions available to you and identifies the best fit according to your style.
Retirement Researcher
While we discussed this as a journey of self-discovery, much like how you choose a profession, knowing your retirement income style also simplifies the complex problem of your retirement income challenge.
As noted earlier, on our Retirement Researcher Basecamp Facebook group, we receive many questions on individual retirement tactics. But we also receive questions along the lines of “How do I get started?” or “How do I put it all together?” Identifying your retirement income style can help narrow your search and filter you to your preferred solutions.
We do this all the time in other areas, but we may not explicitly recognize this. If you want to read a book, you don’t go to your local bookstore, library, or jump online and start browsing every title from A to Z until you find the right one. You go to the section that interests you and narrow down the field. This reduces the overwhelm and presents you with options matching your style. Many of the books you didn’t select are just as good as the book you selected; they just weren’t for you. Book stores recognize this and organize books by category to try and help you find the right book. Unfortunately, we just don’t see that with retirement income strategies. For the most part, it’s a mish-mash, and you’re left to sort it out for yourself.
Understanding your primary retirement income style can help lead you to the retirement income solutions that resonate with you. Are you primarily focused on your investment portfolio’s overall value, or are you primarily focused on your portfolio’s ability to provide a steady stream of income in retirement? As another example, understanding how you feel about spending shocks can determine if you should explore having reserve funds that are not specifically earmarked for retirement income or if you are more comfortable with an insurance solution.
You can imagine how a focus on a steady stream of yearly income and your desire to maintain your current standard of living combine to describe your retirement income style. We created the RISA™ as an assessment platform that brings together the best that psychology and financial planning have to offer as it relates to your retirement income views.
To read more about its its current state click here.
After a year of researching the respective literature, we identified a core list of factors that should help us bridge the divide. We started by creating a list of about 800 questions from the RISA™ factors we identified from an extensive literature review on retirement income. We then reached out to our Retirement Researcher community and our members helped us rank and identify the best questions from the master list. We easily received over 1,000 comments that included tips on improving the survey questions, comments on the quality of each question, and their relevance. In addition, the conversation spilled over into our Facebook group, Retirement Researcher Basecamp.
How did we use the feedback to refine the RISA™?
First, we divided the initial questions by their factors and ranked them based on the feedback we got for each question. We then rewrote many of the questions based on that feedback regarding overall clarity and relevance to the topic. And only then, did we select the very best questions from each of our factors.
Finally, we included in the RISA™ a way to assess how you have approached financial issues throughout your life. By doing this, we can point out how you may best want to implement your retirement income style choices. Ultimately, we want to find out how you best consume and implement financial information so we can provide you with next steps and point out the potential strengths of your style and the hurdles you may run into.
The RISA™ helps you align your retirement income solutions with your personal style. Once you have a better understanding of your retirement income preferences, you can easily identify and select the strategies that will work best for you. This will help ensure that you now have a firm footing to start your plan. In addition, you can better distinguish when a change needs to be made in your plan versus the dangers of chasing the newest shiny object.
As we discussed over this series, you are free to choose a retirement income plan that fits your style. You should not be limited to a recommendation that suits your advisor’s or a media pundit’s preferences. Just like there are many ways to earn a successful living during your working years, there are many ways to “earn a living” in retirement. Before you start, be sure your strategies match with your retirement income style. Doing this will give you a framework for your decisions and simplify the process. Cheers to your retirement income success!
Learn more about the Retirement Income Style Awareness™ (RISA).