This week, I came across a fairly technical article on the esoteric aspects of asset allocation and modelling called “Don’t Bet Your Retirement on Robo-Planning.”

There’s no need for you to read the article. But what you need to remember is that no matter how you mix equity and fixed income investments, you’re missing some critical elements you need for a successful retirement.

What you need are:

  1. Income annuities that provide income for life.
  2. A planning system that optimizes your spendable (after-tax) income.
  3. A way to safely unlock the equity in your residence.

Robo-planning as it currently exists just doesn’t deliver all the tools that are required.

While retirees often need lists for their “to dos” for the day or week, having a list like the one in this article called “6 Big Expenses Retirees Didn’t Save for — But Should Have” is often overlooked.

Let me pick on two of the six outlined in the article:

  • Taxes: Retirees are often surprised at the tax bite coming out of their Social Security payments and Rollover IRA distributions. You have the absolute right to minimize these taxes and you ought to do your best. But don’t assume that the I.R.S. isn’t going to want their fair share as well. Proper planning on your part, though, may keep you both happy.
  • Unreimbursed medical expenses: Fidelity Investments estimates that a couple retiring at 65 will need $240,000 to cover future medical expenses. While that number is alarming enough, in actuality, it’s even worse than that. The estimate of $240,000 doesn’t really address expenses beyond your life expectancy and the costs of caregiving.

Good preparation is desirable, but smart execution may be your only option.