White Paper:

Unbundling Investments from Insurance to Solve for Lifetime Sequence-of-Return Risk

Market volatility poses a more substantial risk to the individual investor as they approach the last five years of their working lives, and transition through their first five years of retirement. The material risk of a poor sequence of returns during this "fragile decade" defines the decumulation period, and distinguishes it from the preceding wealth accumulation phase of an investor's life.

In this white paper, American College of Financial Services Professor Wade Pfau, PhD, examines how current market conditions—low bond yields and escalating costs in retirement—force retirees to rely more on capital gains for sustainable retirement spending. But this increases their exposure to a poor sequence of returns during the "fragile decade" which can be devastating to a retirement plan.

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Download this White Paper to Learn How:

  • The impact of this risk on sustainable retirement spending can be mitigated by creating a risk wrapper for the investment portfolio through a new kind of portfolio retirement income guarantee: a contingent deferred annuity (“CDA”).
  • Rather than having individuals reduce their stock allocation in the fragile decade to avoid the heightened investment risk, retirees can wrap that risk for their investments with insurance.
  • A CDA allows for insurance to be placed on an existing investment portfolio to support lifetime income without creating a taxable event since assets do not need to be repositioned inside an annuity structure.
  • The protection can also be dropped at any point, which may be useful for those who make it through the fragile decade without experiencing a bad sequence of returns.

About the Author:

Wade D. Pfau, Ph.D., CFA, RICP, is the program director of the Retirement Income Certified Professional® designation and a Professor of Retirement Income at The American College of Financial Services in King of Prussia, PA. As well, he is a Principal and Director for McLean Asset Management. He holds a doctorate in economics from Princeton University and has published more than sixty peer-reviewed research articles in a wide variety of academic and practitioner journals. He hosts the Retirement Researcher website, and is a contributor to Forbes, Advisor Perspectives, Journal of Financial Planning, and an Expert Panelist for the Wall Street Journal. Wade has authored four books, including his latest: Retirement Planning Guidebook: Navigating the Important Decisions for Retirement Success.


1 Securities offered through EF Legacy Securities, LLC (EFLS). EFLS is a member of FINRA/SIPC, registered in all 50 states and is a licensed insurance agency (resident KY license no. DOI-896601). In CA, EFLS is doing business as EF Legacy Insurance Agency LLC (nonresident license no. 0L01472).
Non-registered insurance products are sold by Aria Retirement Solutions, Inc. (ARIA), a licensed insurance agency (resident KY license no. DOI-778494). In CA, ARIA is doing business as Aria Insurance Solutions, Inc., (nonresident license no. 0H44773).
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