Weekend Reading: The RISA Framework: A Systematized Approach to Personalizing Retirement Income Strategies for Clients

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
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Weekend Reading

One of the most important decisions you will make in the creation of your retirement plan is determining how to most efficiently tap into your lifelong savings. This money is meant to help act as your paycheck replacement, which is why choosing an income strategy that mirrors your unique financial situation and personal preferences is key.

Elevating your income strategy: In this article, two of my favorite retirement researchers, past podcast guest Wade Pfau and Alex Murguía, highlight what is known as the RISA (Retirement Income Style Awareness) Framework. This profile is created by pinpointing the two strongest factors that determine your overall income preference style:

📌 Factor One: Probability (dependent on market returns) versus Safety (income sources less dependent on market returns)

📌 Factor Two: Optionality (flexibility to respond to economic developments or personal changes) versus Commitment (dedicated to one retirement income solution)

Analyzing your preferences: Based on your answers to a set of specific questions, you will fall somewhere in what is known as the RISA Matrix (as shown in the graph here). Your personal retirement income style will result from a factor one preference combined with a factor two preference, which will then clarify what type of income planning approach you should take. For example, a preference for Probability and Optionality might mean you prefer to source income from a diversified portfolio, versus less flexible investment vehicles, such as fixed-income annuities. In the end, this helps you reach a more customized solution to funding a confident retirement, all the while aligning with your overall risk tolerance.

Bottom line: Your biggest levers to financial success in life have more to do with your personal preferences and values, versus data and numbers. Get the first former right and the latter will be amplified on your way to or through retirement.