Increasingly, individuals in the U.S. are expected to plan and prepare for their own retirement through self-directed defined contribution (DC) plans. This is extremely complex: They must incorporate uncertainty about future asset returns and inflation, how these interact with their non-retirement assets, uncertainty over their own life expectancies and longevity risk, and all the while satisfy their income needs during retirement.
Unfortunately, most financial advice and analysis regarding self-directed retirement plans focus solely on the plan's assets. As a result, they often mischaracterize both the magnitude and the fundamental nature of the risks associated with retirement planning for the typical household.
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