I recently discovered a new retirement tool, and it’s worth sharing with you.
Today, my evaluation of “RISA”, a tool that can provide real value for your retirement planning.
I recently completed the “RISA” assessment, and below I share the detailed results of my individual report, along with my thoughts on the retirement tool.
As part of today’s review, I’m pleased to announce that you’re invited to participate in a free and valuable session from Retirement Researcher titled The Retirement Income Challenge (click the link for free registration) where you’ll be able take the RISA assessment that I’ve evaluated in today’s article and complete your Funded Ratio Analysis. The Challenge runs for four days from November 1st-4th, and will walk you through the whole process. The goal is for you to use your RISA results and recommendations to establish and implement your retirement income strategy. Note that it is a pretty solid commitment – including a 2-hour presentation on each of the 4 days, along with homework each night.
If you’d rather just take a free RISA evaluation and skip the 4-day session, just click on this free link and get the same type of personalized report which I’ll be reviewing below.
(Note: I am getting no compensation for this recommendation, I’m simply sharing it because I’m a big believer in the RISA retirement tool and believe the tool and session will be of tremendous value for those of you who are serious about your retirement planning.)
Now, on to my evaluation of the new retirement tool…
The tool is named “RISA”, short for Retirement Income Style Awareness assessment. It was designed by the brains over at Retirement Researcher (founded by Wade Pfau), and I’m impressed. The RISA assessment has received a positive reaction from “the experts” in the field, and I like the way it generates results based on their in-depth retirement research combined with your personal RISA results.
Powerful stuff.
If you’d like your own personalized report, click HERE. The folks at Retirement Researcher typically charge $29.95 for the evaluation, but they’ve agreed to provide that free link above for readers of The Retirement Manifesto. Thanks, Wade (and team)!
The RISA is unlike any other planning tool I've used, and it's worth your consideration as you plan for retirement. Click To Tweet
RISA – A New Retirement Tool
Before you use any tool, it’s important to know what it’s designed for. When you need to drive a nail, you need a hammer. When you’re trying to determine if your investments will fund your retirement, you need a retirement calculator.
The RISA is different, and I can assure you it will be unlike any other retirement tool in your toolbox. If you’d like to “dig deep”, check out the academic research paper on the new tool titled, “A Model Approach to Selecting a Personalized Retirement Income Strategy.” If you’d prefer a condensed version, I’d encourage you to read this summary from the Retirement Income Journal. If I had to summarize my view on what “job” it’s designed to perform, I’d say it’s a more holistic approach in reviewing your retirement plan, with specific strengths in:
- Determining your appropriate asset allocation
- Suggesting asset classes to best fund your retirement
- Proposing a retirement withdrawal strategy
- Recommending a personalized Safe Withdrawal Rate for your retirement
- Presenting a personalized RISA “Income Style” report, with implications
- Providing a new way to look at your retirement plan
I mentioned the RISA tool in my book review of Wade Pfau’s excellent new book, the Retirement Planning Handbook. If you really want to put your tool to it’s most effective use, I’d strongly encourage ordering the book and reviewing your personalized report as you read the first few chapters in the book (which focus on the RISA). It’s a powerful combination, and a valuable exercise if you’re in the planning phase of your retirement.
The tool also provides a personal Income Style Awareness Report which is what makes the tool particularly useful. Mine is 31 pages long, and I devoured every page. Below, I will present some screenshots from areas of my report that I found particularly useful.
Taking The RISA
To take the RISA, follow THIS LINK.
I won’t spend a lot of time going through the RISA questionnaire, other than to say that it’s different than any other retirement tool I’ve used before. The questions are unique, and I encourage you to not try to “game” the answers. The Report is what you’re after, and you want it to be an accurate reflection of how you really feel about your retirement plan. They advise planning 45 minutes to complete the test, but I finished mine in less than 30. I do think it’s wise to carve out the time to complete it in one sitting.
The Personal Income Style Awareness Report
The true value of this retirement tool is the personal report which you will receive when you’ve completed the questionnaire. The graphics are excellent, and the descriptions of “what it means” will resonate as if someone is reading your mind.
Most importantly, the advice provided in your report is of tremendous value. Based on my report, I’m actually investigating building a rolling Bond Ladder with specific maturity bonds from Investco Bulletshares. Until now, I’ve always held my bonds primarily in Vanguard mutual funds, but the report made me recognize the value of taking the alternative approach of owning some date-specific bonds as part of my bucket strategy. (In full disclosure, I also purchase TIPS every year as an inflation hedge)
Below are the key elements from my personal report:
Your RISA Profile:
For the sake of brevity, I won’t go through every chart and what it means. Rather, I’ll highlight the point that every chart you receive has a detailed explanation of where your style fits on the chart, and why. An example from the “Commitment vs. Optionality” chart is included below, which highlights my preference to retain flexibility (versus, as an example, buying an annuity):
Retirement Income Concerns
The personalized report summarizes your view on various aspects of retirement income planning. Most importantly, that personal style is later incorporated into the recommendations for your investment portfolio design. The income concerns focus on longevity, retirement lifestyle, liquidity and legacy. As an example, my chart regarding “lifestyle” is below:
Retirement Funding Plan
This is where things start to get interesting. Here’s an example of the type of recommendations you’ll see in the Retirement Funding Plan section of your personalized report:
Based on your profile, RISA generates a fascinating section titled the Unified Retirement Funding Plan which makes recommendations for your retirement portfolio based on your personalized RISA results. In my case, I fell into the “Total Return Approach” (see the matrix below), with a suggested stock/bond allocation of 65%/35%, with the potential of higher returns combined with more volatility. I was pleased with how well this aligns with my personal asset allocation of 60% Stocks / 30% Bonds & Cash / 10% Alternatives. Below is a line from my report which summarizes this point:
You are willing to accept unpredictable income streams in exchange for higher potential wealth and an increased
standard of living.
My RISA report includes some specific investment recommendations which are personalized based on my RISA “Total Return Approach” categorization. Had I fallen into the “Protected income” segment, there would be a different recommendation for more stable income (e.g., annuities), with lower volatility, which would be a better fit for an individual who falls in the “Protected Income” category of the matrix. It’s a perfect example of how there are different answers to the retirement income puzzle based on your individual risk tolerance and preferences. This tool combines both.
Below is a key slide from my report, which shows that I “land” in the Total Return Approach segment on the RISA Style Matrix:
The personalized report includes recommendations on how to establish elements of your retirement funding plan based on your classification in the matrix. As an example, below is a schematic outlining their suggestion for the 35% of my portfolio they recommend for my bond allocation. The report suggests that I consider building a bond ladder instead of simply buying bond mutual funds. Here’s the specific bond ladder structure they recommend for someone meeting my RISA personality score:
Withdrawing From Your Retirement Accounts
Based on the recommended portfolio design and asset allocation, the personalized report moves into a “Retirement Funding Plan” section that recommends how you manage withdrawals from your retirement accounts to fund your retirement spending. In my case, the plan includes a recommended Safe Withdrawal Rate of 3.75%. Again, I was impressed with how closely this aligns with my philosophy of staying below the “4% Rule of Thumb,” and the actual targeted SWR of ~3.25% which I’m currently using:
The report then continues with recommendations for how to manage your withdrawal plan going forward, based on your personalized RISA profile. In my case, it recommends a “floor and a ceiling,” which again is well aligned with the approach I’m actually using in my third year of retirement. The recommended approach also includes a nice summary of how to make your annual funding adjustments:
Implementation Preferences
The report concludes with how I prefer to manage my retirement portfolio based on my answers on the RISA survey . Below you’ll see my result of being an investor with a preference for being a “Self-Directed” DIY investor, which again aligns perfectly with my actual approach.
Below is the description I received in my individual report:
If you’re the type who would prefer to delegate your retirement financial planning to a certified advisor, your personalized report would include appropriate recommendations on how to proceed.
Conclusion
The RISA retirement tool is a brand new development from Retirement Researcher and utilizes the extensive research Wade Pfau and his team have done on retirement planning issues. Having gone through the assessment myself, I can testify to its accuracy in identifying my preferences for how to manage my retirement funding puzzle and the validity of the course of action it recommends. This is truly a breakthrough development in the world of retirement planning, and I felt it was significant enough to dedicate this article to the topic. I trust you’ll find my evaluation of interest and respect my decision to share new developments in the “retirement space” which I feel you should be aware of.
The personal report is of considerable value, and given that you can take the assessment for free as a reader of The Retirement Manifesto, I encourage you to consider taking the RISA evaluation and spend some quality time reviewing the personalized report you’ll receive upon completion.
If you’d like to go deeper and can invest the time, I’d recommend you consider participating in the 4-Day Retirement Income Challenge (click the link for free registration).
Note: at this point in the time, the RISA assessment is available to USA-based readers only.
If you’d rather learn more before you proceed, check out this link to the Retirement Researcher RISA Overview.
Your Turn: If you take the RISA, I’d love your feedback. Was my experience unique, or did you also feel like they were “reading your mind”? Did you agree with the recommendations made in your personal report? If you participate in the Retirement Income Challenge, I’d also appreciate your feedback.
Yes I took the 4 day class that Wade and company put on. I agree that the RISA results aligned with my philosophy and calculations if I change my return to be zero percent return after inflation which is what the RISA assumes. There was a lot of comments in the class that this was too conservative, but I guess if you can be at 100% of your target at zero percent return, then you are doing pretty good. I think this tool might be well suited for those not wanting/needing to be able to tweak all the assumptions ourselves.
Thanks Fritz and Scott. Point of clarification, I believe Scott is referring to the Funded Ratio exercise, a separate tool by the Retirement Researchers. I was privileged to take the RISA three times as it was created, working with Wade Pfau, Bob French, and Alex Murguia as a test rabbit in 2020 and then again in the Funded Ratio workshop. RISA is a unique social styles type tool to help fund approaches to retirement income that fit your style. I think it is very good and anyone who bought Wade Pfau’s new book can try it out too. Just use the link on page 15. (Or your free offer to readers of the Retirement Manifesto!)
BTW, I came out a s more of a borderline validator/D.I.Y. retiree, which is why I do as much free research as I can to make my way through my forced early retirement.
Jim at I Was Retired YouTube channel
Questions
1. should we complete the RISA assessment ahead of the 4-day challenge?
2. Will the sessions be recorded and viewable at later time? 2 hours in the middle of a work day is not exactly doable. 1st hour is doable but not the second hour each day.
Vam
On Day 1 of the challenge, the “homework” will be to complete the RISA. So either way if fine. Then we move on to the Funded Ratio. They will be recorded and available through Friday of that week. thx for asking//alex
Thanks for the link.
I’m working my way through the questions. My concern with the flavor of these questions is that these guys are annuity salesmen. I hope I’m proven wrong, but there’s an awful lot of questions about purchasing stability.
RetiringSoon? We ask the full spectrum of questions to get at the root of “how do you like to source your retirement income and what strategies match that (e.g., Total return, Time segmentation, Income Protection, and Risk Wrap). We take an agnostic approach and folks have different views on how they want to personally accomplish this.
Think about how you wanted to source your professional income; there are many ways to do this effectively and much is based on your personal preference. This is what we are getting at with the RISA. For more information on the RISA’s validation here is our research paper (publication forthcoming on the validation of the RISA- https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3788232).
On a personal note- we take our profession seriously as scientists/practitioners- not sure the “these guys are annuity salesman” is a fair representation. Oh well, can’t win them all. 🙂
thx//alex
Can they help with determining a profile if I will be retiring to Mexico?
Thanks, Angela
No se.
Seriously, this is intended for US citizens. If you are (or planning on) being an ex pat, you should be fine with the RISA. best//alex
How did RISA come up with the SWR if you didn’t enter any balances of your portfolio?
Did it suggest 3.75% based on the academic research and based on your answers on the questionnaire and it has nothing to do with the size of your portfolio or its AA?
Smiley,
Great question. We blended our retirement income loss aversion scale with a RISA secondary factor (accumulation vs distribution mindset; AD). AD factor is the difference between wanting to concentrate on portfolio growth (i.e., accumulation) while retired, even though it may entail a bumpier income stream, or focusing on maintaining a more predictable income (distribution) even if that means not leaving the biggest amount possible at death.
PLEASE keep in mind. These are starting points for analysis. I would use these as the initial inputs for a financial plan to see if it works. They are not mean as the “be all end all” rather starting point considerations.
Hi Fritz – thank you for the review and the link to take the RISA. I found it to be a relatively quick and easy assessment to take, with much of the focus being on investment style and tolerance, along with both short and long term planning perspectives. These are things that many struggle with, so getting to a personalized outcome in those areas can provide huge value. I had a 30-page output, plus the disclaimer page. I found it to be accurate to my investment style and retirement outlook, with the exception of perhaps being a bit over-indexed on the probability side versus safety – I’m still considering that result. The probability outcome also likely led to the portfolio recommendation being weighted a bit more towards stocks than my target allocation, but not outside of something that I’d at least consider in the short term.
My assessment had me as Probability-Based in the lower right quadrant, and as a Collaborator in the lower left quadrant, which seems to be reflective of where I’m at right now.. There were a couple of interesting outputs specific to legacy and generational wealth that were informing as well. The initial distribution rate recommendation was bang-on to the recommendation and discussions that I’ve had with our financial consultant in the past year. (If we opt to use a set percentage as our withdrawal strategy.)
Overall, this is a different tool that addresses some specific topics that can be difficult for many folks to self-assess. I will likely recommend it to at least a couple of folks that I know are currently deep into retirement planning as a cross check against where they think they are with their analysis and in their process.
Ed, thanks for your feedback on the tool. Sounds like we had similar experiences, nice confirmation of its usefullness as a “cross check”.
I’m a bit of a skeptic. What is in it for RISA if I take advantage of the free analysis?
Kelly,
We figured that if you feel the RISA adds value you will also decide to interact with the Retirement Researcher brand– such as our retirement income challenge in a few weeks. thanks
Hmm, I never received the email for the free RISA!
I’ve heard that from another reader who later found it in his Spam folder, would suggest you have a look there?
Can you email us at community@retirementresearcher.com . We will get you going. thx//alex
Does the research underlying this tool suggest that one’s RISA profile is relatively constant throughout retirement, or is it likely to change? If the latter, does it make sense to re-take the profile every 5 years or so? Thanks.
Great question Anthony. Absent a longitudinal test it is difficult to answer with more certainty. What we did find is that there were no major statitical differences across gender cohorts. In addition, the retest scores were also fairly consistent. This implies that we are measuring traits (like introversion) versus states (like happiness).
So … what are the answers to the 8 numerical questions? I got a “you’re at risk” rating.
Those were some tricky questions, right?! I’m suspect Retirement Researcher avoids sharing the answers to ensure folks taking the “test” don’t already have the “answers” from a friend. Reminds me of high school….wink.
haha
Long time reader, first time commenter. And that’s my bad, because the number of times I’ve thought this Fritz is going to get me to, into and thru retirement are too many to mention. Many, many thanks for the countless hours you’ve spent educating, enlightening, and empowering.
As for RISA, not to go all Mr. Spock, but fascinating. I haven’t figured out yet how much the report reiterates self-perception or reorganizes it, versus what is new, but I foresee some serious reflection on those issues. The unanswerable question is whether our approach will actually work!
Thanks again!
“…the number of times I’ve thought this Fritz is going to get me to, into and thru retirement are too many to mention.”
I could ask for no better compliment from a reader! Thanks for dropping your first comment, much appreciated!
JD,
We attempt to surfaces what you are thinking in an actionable manner– more like your first point– and how these preferences translate to a starting point for your analysis. best//alex
Long time reader! I took the RISA and received affirmation as to what I am doing is what I should be doing. Bond ladders was a suggestion that I have not implemented. I can set up a bond ladder at Vanguard, but Fritz would love insights into what you have found. Thank you!
CA, thanks for the feedback, glad to hear the RISA affirmed your direction. Seems like positive feedback from the readers who have taken it, pleases me to hear that. As for the bond ladder, have it on my “To Do” list, but haven’t carved out the time to investigate it further as of yet. I didn’t realize “ladders” were available from Vanguard, will have to check that out, too. Thanks.
Hi Fritz, great post with lots of valuable information. I’ve read many articles from Wade and have been signed up on his web site for several years, so I had heard of the RISA evaluation but had never done it. Thanks for the link, I enjoyed doing the evaluation, and the price doesn’t get better than free.
The evaluation made you really think about your investment style and why you make some of the decisions that you do. It was time well spent for me. The stock/bond-fixed assets allocation in my recommendations section was spot to where I am currently at, which I expected but was happy to see confirmed.
I have to confess though that in a sense I cheat somewhat on my financial planning at this point in my life. All through my working years I did all the planning and implementation of my retirement planning myself, with an account at vanguard. I had lots of ups and downs like everyone does, but it was just a math problem to me. I love math. I figured out when I was young where I wanted to be when I wasn’t, then I looked at what was required to get there and I put the plan in place. It seemed pretty straight forward to me, although challenging at times because things never worked out exactly as I expected.
When I turned 40 I thought I had enough money to talk to a professional without being embarrassed, so I did a free 1 hour consultation with a CFP I had come across in my work. I did that for the following 15 years. It takes me a long time to build trust.
I retired when I was 56 and continued to do my own financial planning for the next year. Things had gone well and I was comfortable with where I was at financially but I just didn’t really want to spend the time on it anymore.
I turned over the responsibility of running the planning and implementation to the same guy who had given me 16 years of free advice, it seemed only fair.
I have been retired 8 years now and I’m still happy with where I’m at. I don’t think the fees are unreasonable for the free time I get in return. Time is much more valuable to me now than money.
I meet with him once a year and do updates to my planning. That’s enough to keep things on track. It’s still just a math problem to me.
Love your blog Fritz, keep writing!
“It was time well spent for me.”
Thanks for your continued loyalty to my site, 31. And, for the record, I don’t consider hiring a CFP to manage your finances in retirement as “cheating” at all. Rather, someone who values their time and knows their personal priorities. Well done.
Is it just me??
I am having issues with this whole thing. I could not set my password – apparently yahoo email is blocking their url link the site kept trying to email. They helped by manually setting a password for me.
But now, I clicked on the video intro to the RISA and it is also blocked. I googled how to unblock a site in chrome – but that also is not working.
Which is making me wonder if I will be able to access their training.
VAM, Can you email us at community@retirementresearcher.com . We will get you going. thx//alex
Fritz – Thanks for sharing your evaluation of the RISA tool. I had some initial trouble (as others apparently did), getting an email back from the site with an initial password to take the survey. But after a few emails back and forth with their support team, I was able to log-on and complete the assessment.
It took me about 30 minutes to complete and the assessment report largely aligned with where I see myself. I found the RISA Style Matrix to be right on in terms of my individual style preference
(Optionality/Probability-based). The portfolio recommendation (75% stocks, 25% bonds) is more aggressive than I am currently following (60%/40%). I think I’ll stick with my allocation for now, but I will also look further into bond laddering as a potential option for funding near-term retirement spending.
I was a little taken back at the final 8 questions in the RISA assessment and the report that indicated (I assume based on my responses to the 8 questions) I have some risk at working with and understanding numerical concepts. I have 35+ years working in executive finance positions and I’m a former CPA (no longer active)! I’ve been a DIY investor and retirement planner, but worked with a fee-only CFP a couple of years ago who prepared an independent plan to confirm I was well-prepared to retire this year at 58. I would like to understand how the answers to the 8 final questions were used to reach a conclusion that seems to suggest I might want to consider working with a financial advisor. To be honest, I thought those questions at the very end were a little self-serving.
Thanks again Fritz!
Mike- Thanks for the feedback. I’m glad the RISA fits the bill for you. Regarding the questions at the end, they were adapted from numeracy questionnaires used and normalized in the literature; we tweaked the language to reflect investment themes but the calculations are unchanged. Our interest in numeracy was to use your actual score and compare it to your perceived numeracy score; I think this gap (i.e., the Dunning-Kruger effect) is more telling than actual numeracy.
These numeracy questions are not used in the creation of the Financial Implementation Matrix; which indicates how do you prefer to implement your financial plan. To come up with that matrix we combine your perceived self-efficacy and advisor usefulness scores.
Side note- there is no “gotcha” here or trying to jam someone into an advisor relationship. We created the Implementation Matrix so you can implement advice on your terms. That is a more productive and fruitful exercise. thanks again!//alex
Fritz…
Here is a challenge worthy for the man of your caliber…
Find a tool that has a high rate of success in getting the “333,527,197” of the population as of 10/21/2021 consistently save just 15% for the next 35 years.
We will be the happiest nation in the entire world!