Developed by Wealth Building Cornerstones (WBC), this financial planning framework is designed to maximize income in retirement by integrating two distinct financial disciplines: investment returns and actuarial science. This approach moves beyond traditional “investment-only” strategies to create a more efficient and resilient financial plan.

The first economic power is the potential for investments. This involves accumulating wealth through traditional investment vehicles like stocks, bonds, 401(k)s, and IRAs. While investments offer high growth potential and liquidity, they are inherently volatile.

Relying solely on market returns when preparing for retirement introduces significant risks, such as sequence of returns risk, where a market downturn early in retirement can permanently deplete a portfolio if withdrawals continue.

The second economic power is actuarial science, or risk pooling. This power is harnessed through insurance-based products like whole life insurance and income annuities. Unlike investments, which are solely designed to make our money grow, insurance products are manufactured in such a way that they provide an efficiency that it’s not possible to achieve with an investment-only approach.

The WBC approach establishes that these two powers were always meant to work together. They complement one another and create some of the following results:

1. Permission to spend more: Research suggests that incorporating actuarial science can support a higher level of retirement spending and a larger legacy than relying on investments alone.

2. Self-Funded Pensions: For those without traditional employer pensions, this approach uses insurance-based products to create a “personal pension” for consistent and reliable cash flow.

3. Volatility Buffer: It creates a shield against market volatility by having access to cash that is not directly correlated with the markets, allowing investors to leave their market assets untouched during downturns.

4. Permission to Invest: The contractual guarantees of the insurance products can give retirees the confidence to invest their remaining assets more aggressively for growth.

5. Take a glance at your numbers: With WBC’s proprietary calculator, we can see, with your own numbers, the difference between using one or two powers.