Professor of retirement income, The American College
Wade Pfau is professor of retirement income at the American College and principal and director of retirement research at McLean Asset Management.
The ground-breaking notion he introduced with his research just six years ago is that retirement income planning is a different field than traditional financial planning and investment management.
His first articles in the Journal of Financial Planning had major impacts on his life, including relocating 7,000 miles and seeing one of those articles featured in The Economist — a long-time career goal for an economist such as himself.
Mr. Pfau, 38, had been enjoying his life as a professor in Japan for years, but after experiencing a major earthquake and life in typically small Tokyo quarters with his growing family, the Iowan decided it was time to come back to the U.S.
A life-long saver, he became interested in William Bengen’s 4% retirement withdrawal rule and tested how it worked — and didn’t work — internationally. His research soon led to the Journal articles and an unexpected response.
“I received reader feedback and people were discussing them online,” Mr. Pfau said. “That doesn’t usually happen in academia.”
Instead of simply looking at withdrawals during retirement, Mr. Pfau examined what rate of savings through one’s working years ensured the building up of a sustainable retirement nest egg. He won the Journal’s inaugural Montgomery-Warschauer Award for his paper on that topic.
The articles kept coming, along with invitations to speak and, eventually, a job offer from the American College.
Mr. Pfau’s research has had an effect on the industry as he identified the silos of investing and insurance and posited that retirement income planning is about integrating the two.
“More people are questioning the 4% rule, and there is more openness now to the idea that not all annuities are created equal,” he said.
– Deborah Nason