Why It’s Time for Advisors to Add the Actuarial Approach — & Copilot — to Their Retirement Toolkit

Retirement Planning Has Become Too Complex for Clients — & Too Noisy for Advisors

• Most advisors rely on one of two frameworks: Withdrawal rate rules (e.g., 4% rule variants); or
• Monte Carlo simulations embedded in planning software.

Both approaches have value, but both also suffer from structural weaknesses:

• They focus on portfolio returns, not household liabilities.
• They produce probabilities of success that clients often misinterpret.
• They struggle with non-level spending, future asset sales, delayed Social Security, and couples planning.
• They provide no intuitive year-to-year metric for whether a client is on track.

Advisors know this. Clients feel this. And both groups increasingly want something more transparent, more intuitive, and more grounded in the way other financial systems are evaluated.

The Actuarial Approach Reframes the Question

Instead of asking, “How much can I safely withdraw?” the actuarial approach asks, “What is the household’s funded status — and how should spending adjust to maintain it?”

This shift mirrors the valuation methods used by actuaries for pensions, insurance companies, and Social Security. It uses:

• time value of money;
• present value of assets and liabilities;
• personalized longevity planning assumptions;
• annual remeasurement;
• liability-driven investing principles; and
• risk-adjusted discounting.

In other words, it applies the same disciplined financial economics used to evaluate every other long-term financial system.

For advisors, this means a planning framework that is more stable, explainable, adaptable, and client-friendly. Now, with Copilot, it is also easier to implement.

Why Copilot Is the Missing Piece

Historically, advisors may have avoided actuarial methods because they seemed too technical or required spreadsheet expertise. That barrier is now gone.

Copilot can:

• build and update the actuarial spreadsheet;
• recalculate funded status annually;
• stress test assumptions;
• model alternative spending paths;
• revalue liabilities under different inflation or return assumptions;
• generate client-ready explanations; and
• document the advisor’s compliance process.

In short, Copilot turns the actuarial approach from a technical framework into a practical, scalable advisory tool. Advisors no longer need to be actuaries. They simply need to understand the logic — and let Copilot handle the mechanics.

Using the Actuarial Approach

Step 1 — Classify Spending Into Essential Versus Discretionary

This allows the advisor to match non-risky assets to essential expenses, a core liability-driven investing principle.

Step 2 — Select Reasonable Assumptions

Most advisors already use assumptions similar to:

• 5% nominal for non-risky assets;
• 8% nominal for risky assets; and
• 3% for inflation.

These are consistent with capital market assumptions used by major advisory platforms.

Step 3 — Calculate Household Funded Status

Copilot can do this instantly using the client’s data.

Step 4 — Establish Guardrails

For example:

• If funded status > 120% → spending can increase modestly; and
• If funded status < 95% → spending should decrease.

These guardrails are intuitive and easy for clients to understand.

Step 5 — Remeasure Annually

Just as actuaries revalue pension plans each year, advisors can revalue household funded status annually — or more often, during volatile markets.

Why This Matters for Advisors and Clients

Advisors who adopt this approach gain:

• a more defensible planning framework;
• a clearer communication tool;
• a more stable year-to-year client experience;
• a method that naturally integrates with AI tools; and
• a way to differentiate their practice.

Meanwhile, clients receive a personalized, transparent, and data-driven plan that reflects their actual liabilities rather than generic withdrawal rules.

Most importantly, clients gain confidence — not because the plan is optimistic, but because it replaces the fear-inducing language of failure probabilities with actuarial discipline.

The Future of Retirement Planning: Actuarial + AI

The advisory profession is entering a new era. AI will not replace advisors — but advisors who use AI will replace those who don’t. And the actuarial approach is uniquely well suited to this transition because:

• it is rules-based;
• it is transparent;
• it is spreadsheet-driven;
• it requires annual recalculation;
• it benefits from scenario testing; and
• it produces a single, interpretable metric.

These are exactly the kinds of tasks Copilot excels at.

A Call to Advisors

If you are an advisor who wants to:

• improve the rigor of your retirement planning;
• reduce client confusion ;
• provide more stable guidance;
• differentiate your practice; and
• leverage AI responsibly,

then it is time to add the actuarial approach to your toolkit.

You don’t need to become an actuary. You simply need to adopt a framework that actuaries have used for decades — and let Copilot help you implement it.

Read more by Ken Steiner:

• Use This 3-Step Process to Develop Better End-of-Life Assumptions for Your Clients
• How Much Extra Can Your Client Afford to Spend in 2026?
• How to Help Clients Budget for Long-Term Care

Ken Steiner is a retired actuary with a website titled, "How Much Can I Afford to Spend in Retirement?"


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