Episode 454: A Master Plan For Mr. Bill And Portfolio Reviews As Of September 12, 2025
Sep 14, 2025
Join a deep dive into retirement planning where a data-driven approach meets real-life application with Mr. Bill. Explore the vital difference between risk and uncertainty in forecasting, crucial for financial success. Discover innovative strategies for portfolio management, including an emphasis on risk parity and thoughtful asset allocation. The discussion also highlights maximizing spending while maintaining flexibility in withdrawals. Plus, get insights on investment portfolios that are thriving in a bullish market.
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insights INSIGHT
Start Forecasting With Base Rates
Use base rates for forecasting inputs rather than pessimistic assumptions.
Adjust conservatism on outputs, not by corrupting input base rates.
insights INSIGHT
Risk Versus Uncertainty Matters
Distinguish calculable risk from deep uncertainty when forecasting long horizons.
In uncertain domains, prefer simple rules of thumb over adding variables that create error.
volunteer_activism ADVICE
Inventory Your Expenses First
Track actual expenses for the past few years and categorize them before planning.
Separate mandatory and discretionary costs to see what you truly must cover.
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In this episode we answer one big long email from Mr. Bill (actually Dr. Bill). We discuss a planning process grounded in good data science, forecasting techniques and decision theory, and how we incorporate the concepts described in Bill Bengen's new book, using Dr. Bill as our guinea pig.
And THEN we our go through our weekly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio.
Retirement planning doesn't have to be rocket science. In this illuminating episode, we dive deep into the transition from accumulation to distribution phases of financial independence, offering a clear-eyed approach based on data science and practical wisdom.
At the heart of effective retirement planning lies proper forecasting methodology. Most financial advisors miss this crucial foundation – they load forecasts with conservative assumptions rather than using base rates, creating unnecessarily fearful projections. We explore why understanding the difference between risk (what's calculable) and uncertainty (what isn't) transforms how you should approach planning for the decades ahead.
The four levers that control your retirement success form our central framework: supplemental income, asset selection, flexible withdrawals, and fear/hoarding. Each lever offers unique opportunities to optimize your financial independence. Risk parity portfolios consistently demonstrate 1-2% higher safe withdrawal rates than traditional portfolios, while simply accounting for retirees' typical lower inflation experience (CPI minus 1-2%) can safely increase withdrawal rates by 0.5-1%.
We tackle the psychological aspects of retirement planning too. Most retirees underspend significantly, pulling the "fear and hoarding" lever while ignoring the other three, ultimately sacrificing quality of life and relationships. Instead, we advocate for thoughtful legacy planning while alive – supporting family members, teaching financial literacy, and creating meaningful impact with your resources.
Whether you're approaching retirement or already there, this episode offers practical wisdom to simplify your planning process. By focusing on tracking expenses meticulously in the early years and using simple rules of thumb for long-term forecasting, you'll create a retirement plan that maximizes both financial security and life satisfaction.
Risk Parity Radio 
