By: Don Ezra -
Consider this scenario. You’ve just turned 65. You’ve just retired. Now, of course, you have to replace your paycheck with a new source of income. But that’s OK, because you’ve saved $1,000,000 in your “pension pot.” (Congratulations!) The thing is: you don’t know how much you can draw each year from your pension pot. If you knew how long you were going to live, and what investment return you’d earn, then you can do the calculation (or go to an expert who can). But those are two things you don’t know. Together, they make this “the nastiest, hardest problem in finance,” according to Nobel Prize Winner William Sharpe. So you’re not alone in wondering what to do!

“Imagine a parade of 10,000 people marching past your house every day, each holding a retirement cake and a balloon. That's a lot of calories & balloons and that is only in the United States!”

Projecting forward, today’s 120M+ active participants in retirement plans in North America will be retiring over the next few decades. More than 70% of those will not have guaranteed income for life from private pensions. It is no surprise that decumulation - the problem of drawing down one’s savings in retirement - has recently become a topic of interest to researchers and economists. The enormity of the problem highlights the importance of this issue to both public policy experts as well as the financial services industry.

We live in the age of information overflow. The channels, methods, and frequency at which
we receive information have drastically changed over the last two decades. Mass media such as TV and radio have given way to personalized news feeds and social media interactions.

Our ever-increasing reliance on digital devices has had adverse consequences on our attention span and emotional development. At the same time, this very technology allows people to interact with the world differently.