Teaching retirement income in The American College’s new Ph.D. program for financial and retirement planning is a sea change from teaching macroeconomics to public policymakers from emerging market countries.
But for Wade Pfau, who came to the Bryn Mawr, Pa.-based American College in 2013 after a decade of teaching at the National Graduate Institute for Policy Studies in Tokyo, the radical shift in career is very welcome, and his new gig is one that he truly enjoys.
“Economics focuses on trying to demonstrate mathematically why some models work, whereas with financial planning, you can’t get away with using models and assumptions. You have to explain things so that they’re both understandable and relatable,” Pfau said.
When it comes to retirement planning education, then, Pfau considers it his priority to bridge the gap between academic research and its practical application.
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His name first came into the spotlight in 2011 with a research paper entitled “Safe Savings Rate: A New Approach to Retirement Planning over the Life Cycle.” Pfau credits the launch of his current career to that paper, which won the inaugural Journal of Financial Planning Montgomery-Warschauer Editor’s Award. Even now, he said, much of his work centers around its main concept, which is that anyone who saves at their “safe savings rate” will likely be able to achieve their retirement spending goals regardless of their actual wealth accumulation and withdrawal rate.
That viewpoint is catching on quickly with financial advisors and consumers, many of whom are keen readers of Pfau’s Retirement Researcher blog (WPfau.Blogspot.com). But even so, most retirement research today is still focused on the notion that individuals need to find a safe withdrawal rate for their retirement and use that as a barometer to compute a wealth accumulation target to fund their desired retirement spending. Most academics and financial advisors continue to view the accumulation and decumulation phases of life as distinct, Pfau said, rather than seeing them as part of the same cycle.