Retirement Spending Optimization Built on Research, Not Rules of Thumb
Retirement income sustainability is the single most important planning objective for most Americans age 50 and older, and running out of money before running out of time is their greatest fear. Whether you are still saving or already drawing from your portfolio, the real questions are practical ones: How much can I spend? And what do I do when markets do not cooperate?
Empirical research on retirement spending began in earnest in the 1990s, in anticipation of the wave of Baby Boomers who would start retiring in the 2010s, and it has evolved significantly over the past 35 years. Financial Planning Hawaii's approach incorporates the latest research and thought leadership and makes those concepts practically implementable in real-world client portfolios. Much of that research is our own: founder John (JR) Robinson has been at the forefront of retirement income sustainability research for the past quarter century.
Saving for Retirement: Build the Reserve Before You Need It
For those still accumulating wealth, we review your savings, employer retirement plan contributions, expected Social Security benefits, and how your portfolio is built. As retirement approaches, the priority shifts to accumulating five to seven years' worth of expected income distributions in money market funds, CDs, and Treasury bills inside your retirement accounts, a deliberate hedge against sequence of returns risk. You can explore your own numbers with our free retirement saving app.
Spending in Retirement: Dynamic Distribution, Not a Static Formula
For retirees, we replace static withdrawal formulas with a dynamic distribution strategy: a research-based initial withdrawal rate, one simple decision rule for refilling your cash and bond reserve, and predefined spending adjustments for severe downturns. We also factor in Social Security timing, required minimum distributions, pension income, and tax-efficient withdrawal sequencing. Throughout, you keep complete lifetime control over your savings. Explore your own scenarios with our free retirement spending app.
The FPH Difference
Financial Planning Hawaii rejects much of the financial planning orthodoxy: Monte Carlo simulations, "probabilities of success," the 4% Rule, 60/40 model portfolios, age-based allocations, risk tolerance matching, target date funds, and TIPS funds. Challenging conventional wisdom is central to how we plan, and our positions are backed by a quarter century of published, peer-reviewed research.
Lifetime Annuitization vs. Dynamic Distribution
Two divergent lines of research sit at the forefront of retirement spending optimization. Each offers a different answer to sequence of returns risk and longevity risk.
Lifetime Annuitization
Retirees protect against sequence of returns risk and longevity risk by pooling with other retirees and electing a guaranteed lifetime annuity. The allure is the issuing insurance company's promise to pay for as long as you live.
The tradeoff: The decision to annuitize is generally irrevocable and leaves no remaining balance for heirs.
Dynamic Distribution
Investors who apply clearly defined decision rules, and who are willing to adjust portfolio allocations and spending over time, can achieve greater total income and wealth than under annuitization or the primitive static withdrawal strategies popularized by 1990s research into so-called "safe withdrawal rates." You keep complete lifetime control over your savings.
The tradeoff: There is no guarantee against running out of money.
Where Financial Planning Hawaii Stands
For the most part, we side with the dynamic distribution camp. In our experience, including our own published research, retirees who follow a dynamic distribution approach generate more total income and wealth than those who annuitize in all but the worst future investment outcomes. We also acknowledge that as interest rates rise and immediate annuity payouts increase, the lifetime payout option may become more attractive, and that annuitization may be more compelling in the absence of a bequest motive.
Conventional Wisdom We Leave Behind
Many of the most popular concepts in retirement planning are, in our view, oversimplified or simply wrong. Here is what Financial Planning Hawaii rejects, and what we do instead.
Monte Carlo Simulations
Most of the industry relies on them to judge retirement readiness, yet there is abundant criticism in the academic research community of their merits for retail consumers, including how well these models predict real-world outcomes.
Instead: Nest Egg Guru, our proprietary simulation software, built to make retirement spending tangible and more realistic.
"Probability of Success" Scores
A single percentage is easy to quote and hard to act on. It says nothing about what you should actually do when markets fall.
Instead: Clearly defined decision rules that tell you when to refill your reserve and when to adjust spending.
The 4% Rule
A static withdrawal strategy that grew out of 1990s "safe withdrawal rate" research. It never adapts to markets, and we believe it should be retired.
Instead: A 5% to 5.5% initial withdrawal rate for clients retiring in their 60s, paired with dynamic adjustments.
60/40 Model Portfolios
A fixed stock-to-bond ratio has nothing to do with how much income you actually need to draw from your portfolio.
Instead: A cash and bond reserve sized to five to seven years of your expected distributions.
Age-Based Allocations
Rules of thumb that set your portfolio by your birthday rather than by your spending needs.
Instead: Allocations driven by your expected withdrawals and maintained by one simple, market-based decision rule.
Risk Tolerance Matching
Questionnaire scores measure how you feel on a given day, not what your retirement income plan requires.
Instead: A predefined playbook for downturns, so decisions are made in advance rather than in a panic.
Target Date Funds
Bundling stocks and bonds into one fund removes control over which assets are sold, and when.
Instead: Ultra low-cost stock index funds or ETFs, held separately from individual cash and bond securities.
TIPS Funds & Bond Funds
We do not ever use bond mutual funds or ETFs, including TIPS funds.
Instead: Individual securities for cash and bonds, with ladder maturities extended to lock in higher rates when inflation and interest rates run high.
Our Dynamic Distribution Method
Six practical elements that turn retirement spending research into a plan you can actually follow.
Build a 5-7 Year Reserve
As you approach retirement, accumulate five to seven years' worth of expected income distributions in money market funds, CDs, and Treasury bills inside your retirement accounts to hedge against sequence of returns risk.
Set a Research-Based Withdrawal Rate
We use 5% to 5.5% as a reasonable initial withdrawal rate for clients who retire in their 60s, 4% to 4.5% for clients retiring in their 50s, and 6% to 6.5% for those retiring in their 70s.
Use the Right Building Blocks
For stocks, ultra low-cost stock market index funds or ETFs. For cash and bonds, individual securities. We do not ever use bond mutual funds or ETFs.
Apply One Simple Decision Rule
Following years in which the stock market posts a positive return, we sell stocks to replace the cash and bonds spent in the prior year. Following down years, we do not sell from the index funds.
Adjust Spending Only When It Matters
During the first year of a severe stock downturn, the first line of defense is to forgo cost-of-living increases. During a second year, the recommendation may be to modestly reduce spending.
Respond to Inflation
During periods of high inflation and high interest rates, the recommendation may be to extend bond ladder maturities to lock in higher rates.
Retirement Spending Readiness Checklist
How many of these has your current retirement plan addressed?
The Research Behind Our Approach
Our methodology incorporates elements of several key research studies, along with findings from our own published, peer-reviewed research.
Supporting Research
Independent studies that inform our dynamic distribution method.
Published Work by John (JR) Robinson
Recent research and commentary from our founder.
Proprietary Retirement Simulation Software
While most of the financial planning industry uses Monte Carlo simulation software to assess retirement spending preparedness, there is abundant criticism in the academic research community of the merits of this approach for retail consumers. In the early 2010s, John created his own proprietary simulation software, Nest Egg Guru, to address these shortcomings. Today, its retirement saving and retirement spending apps sit on the home page of both of our websites for anyone to use. The software makes retirement saving and spending uniquely tangible and, in our opinion, more realistic than competing Monte Carlo simulation apps.
Recognized Thought Leadership
John (JR) Robinson has published numerous peer-reviewed journal articles on retirement income sustainability, including three best-paper award contributions, and was twice included on Investopedia's Top 100 list of the most influential financial advisors in the U.S. In 2026, Financial Planning Hawaii was featured in Citywire as Hawaii's fastest-growing RIA. For more on JR's background, see his author profile, and read the reviews clients have left on our Google Business Profile.
Frequently Asked Questions
Answers to common questions about how Financial Planning Hawaii approaches retirement saving and spending.
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