Life After Full-time Work Blog

Learn about preparing for life after full-time work through posts from Don's upcoming book.

#194 More On Retirement Styles From Dr Wade Pfau

And (at the end) an announcement of an upcoming event in Toronto


You’ll remember my previous blog post that set out the fundamental retirement styles identified by Dr Wade Pfau, Professor of Retirement Income at the American College of Retirement Services (and his colleagues Alex Murguia and Bob French). In this post I’ll explain the one further stage of their analysis.

You’ll also remember (and if you don’t, that’s why I’m reminding you!) that the fundamental style to which you belong comes from your answers to two questions:

  • How much do you want your retirement solution to be locked in? In other words, are you the set-it-and-forget-it type, or do you prefer to keep things flexible? Wade calls this the commitment versus optionality factor.
  • Would you rather have some sort of contractual protection, or are you comfortable with how markets play out? This is the safety first versus probability factor.

From the two possible answers to each of the two questions, you have four overall possibilities: commitment and safety first, commitment and probability, optionality and safety first, and optionality and probability. I refer to these later as the four primary combos.

Each of those four primary combinations leads to an overall strategy that’s most comfortable for you: respectively, some insured lifetime income, a “risk wrap” strategy, a time segmentation strategy, and a total return strategy.

There’s lots more detail, plus how your circumstances might influence your choices, in that blog post, and of course even more on Wade’s Retirement Income Style Awareness website.

Now let’s look at the four secondary factors that Wade identifies. I take these from the first chapter in Wade’s Retirement Planning Guidebook.


The first he calls the “time-based versus perpetuity” factor. Do you prefer to fund your income floor (the portion that you want to lock in) for a specific time period (for example, for ten years, or perhaps until age 85) or for as long as you live? If it’s for as long as you live, you need some form of longevity pooling to ensure that it works.

The second he calls the “accumulation versus distribution” factor. Most of the attention has so far been paid to the accumulation stage of preparing for retirement, building wealth. On the one hand, if you like this and want to continue focusing on portfolio growth, that’s a valid choice, but it comes at the cost of what might turn out to be a lumpier and more uncertain income stream. On the other hand, the distribution choice means that you’d rather have a more predictable income stream, but it’s at the cost of the potential size of your estate.

The third he calls the “front-loading versus back-loading income” factor. Front-loading implies that you’d prefer higher spending early in your retirement, for enjoyment while you’re more likely to be healthy (and alive!). Back-loading implies that you’d prefer spending less in the early years, to ensure that you can maintain that lifestyle even if you live a long time?

The fourth and final one he calls the “true versus technical liquidity” factor. Technical liquidity implies that you have liquidity via assets that you can cash in if an emergency arises, even if you then have to make cuts elsewhere. True liquidity implies that you set aside assets (cash or insurance) specifically for emergencies (not for retirement expenses or legacies). For example, if you have an income annuity then those assets aren’t liquid, but you can still focus on the non-annuity-income assets as the source of true liquidity.


You can see that these secondary factors are different from the first two (primary) questions, but they’re still important issues that you should address.

Also, your answers to some of these secondary issues will be consistent with some, but not all, of the four primary retirement styles.

Consider the first primary combo I mentioned, income protection. The secondary factors most correlated with this combo are perpetuity income flooring, a distribution mindset, back-loading and true liquidity.

The second primary combo, the risk wrap. The particular secondary factors correlated with this combo are back-loading and technical liquidity.

The third primary combo, time segmentation. The particular secondary factors correlated with this combo are front-loading and true liquidity.

The fourth primary combo, total return. The secondary characteristics correlated with this combo are time-based, accumulation, front-loading and technical liquidity.


Have you thought about the primary and secondary factors, and determined which ones apply to you? If so, I’m sure Wade’s analysis and comments (which, in his book, are of course far more detailed than the bare summary I’ve assembled here) will have been very helpful.


Now, that Toronto event.

You may remember that last year I did a blog post on Dr Theo Kocken’s magnificent movie Your Hundred Year Life, and the outstanding panel discussion that followed it. Well, I’m thrilled that the Consulate-General of the Kingdom of the Netherlands is using that movie and a three-person discussion panel that includes two of the original panel members, as the basis for delving into the thought-provoking theme of “Rethinking Aging”. Their event takes place in Toronto on Wednesday 4 October 2023, from 4 pm to 8 pm. Here’s the link to learn more about the event and register for it. I have a tight flight connection, but I’ll be there!


In addition to the two primary questions that determine your “retirement income style,” Dr Wade Pfau suggests that you consider four additional issues. If you want to lock in an income stream, is it for a specific time period or for the rest of your life? In retirement, are you still focused on asset growth, or do you prefer a more predictable income stream? Would you rather spend more in the early years, or save it for the possibility of a long life? Would you prefer to set aside a specific emergency fund, or adjust your spending to cope with emergencies?

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I have written about retirement planning before and some of that material also relates to topics or issues that are being discussed here. Where relevant I draw on material from three sources: The Retirement Plan Solution (co-authored with Bob Collie and Matt Smith, published by John Wiley & Sons, Inc., 2009), my foreword to Someday Rich (by Timothy Noonan and Matt Smith, also published by Wiley, 2012), and my occasional column The Art of Investment in the FT Money supplement of The Financial Times, published in the UK. I am grateful to the other authors and to The Financial Times for permission to use the material here.

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