More and more research in the field of retirement planning has recently been advising Americans to discard the one-size-fits-all strategy and adopt a new model, which is more tolerant to uncertainty. This is called “The Rule of Four Futures”, and specialists believe it is the most pragmatic and flexible approach for the retirement of the future.
Though the majority of Americans are still looking forward to a smooth retirement, studies have found that only less than half of them actually get what they had planned. The rest are convinced that either the market collapse, the health care cost increase, their relationships’ modifications, changes in their goals, or even an unexpected opportunity are the factors that brought about their retirement situation.
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The “Four Futures” model, which was initially designed by a futurist James Dator, has now been widely adopted by financial advisors to assist their clients in planning for a world where they know that nothing will go according to plan.
From Stability to Surprise: What Are the Four Futures?
- Expected Retirement (Continuation)This is the version of life that most people would consider to be their retirement years: quitting work around the age of 65, taking money out from their investments, relying on a social security check, and leading a peaceful life. Still, this needs efficient planning. Specialists say that still, this version can be eroded due to high medical bills and inflation if there are no sufficient funds built in.
- Disrupted Retirement (Collapse)The sudden illness of a spouse, the death of the partner, price fluctuations, or reduction in social benefits are some of the reasons retirees do not want to happen. The scenario, still, not many are prepared to face. A 2025 study carried out by Edward Jones and Age Wave confirmed that 81% of retirees suffered a major disruption in the first 5 years after retirement.
- The Safe Retirement (Discipline)In this scenario, retirees are sacrificing current spending they could afford to set aside out of fear of a possible future loss. Many financial advisors consider that the decision-making process of the people due to unfounded fear is likely to lead to regrets and miserable lives. In fact, surveys on retirement in recent years have shown that most of these have accumulated more wealth than they had planned, with an average of less money spent out of fear over the years.
- The Unexpected Retirement (Transformation)This is the life no one expects or sees coming, where a person’s life unexpectedly changes, gets better or worse. Those that can be placed in the category might include divorce, making a major career move in old age, relocating to another country or even inheriting assets that were not expected. While some events may be painful, others are joyful. A study by Boston College proved that 43% of retirees were at a loss for being surprised with the fact that retirement is more enjoyable once it has started.
Did The Elderly Listen To The Four Futures That Made Sense Before
Having been subjected to averages such as average life expectancy, average market returns, average spending, retirement planning now changes its focus. However, experts argue that people’s real-life experiences are far from average. Instead of sticking to one particular outcome, the Four Futures model helps prepare people to an array of different outcomes through flexibility, resilience, and emotional readiness.
Gregory Furer, the financial advisor, holds the opinion that “It’s not that many of the plans are bad they actually read well, but still many of them fail due to not being able to assume that life can alter its course. The acceptance of the human factor and the need for the plan to be life-based is brought forward by this model.”
In What Ways Advisors Have Made Good Use of the Framework
The Four Futures framework is gradually being used by advisors to accomplish better client interactions by doing a stress test of the investment returns in the four different categories. Some firms are even devising four different income strategies in order to manage different risks, which are directly reflected in the portfolio. Each of these income strategies is dedicated to the possibility of one of the scenarios happening or not, thus making a quick change in strategy comfortable for the clients.
Melissa Caro, CFP®, expresses that the key is the mental shift: “When clients feel that their plan is no longer rigid, they will be more confident. The Four Futures helps humans be less afraid of the unknown and starts to see it as a part of the process in a different light.”
What to Remember if You Are a US Citizen and You Are Going to Retire Soon
- Do not be content with the best outcome scenario only, consider also the worst-case ones.
- By using insurance (long-term care, mainly), your savings account, and purchasing annuities as shock absorbers in case of some catastrophe, you will also be achieving the buffer effect.
- From time to time, re-examine your plan since the objectives and the situation can change dramatically within a short span of time.
- Allow for a change in lifestyle because at some point you may desire to change or may need to.
- Converse with a professional who besides numbers understands other topics.
What’s behind the Words?
The next era of retirement financial plans won’t be about expecting the inevitable but, on the contrary, will be around using a well-structured plan that can handle even unexpected scenarios and, in the best-case scenario, still be able to prosper.
Transitioning from retirement as the end to retirement as a very dynamic phase calls for the “Rule of Four Futures”, which may be the out-of-the-box thinking that will help Americans move on from a well-prepared financial status to emotional and mental strength for a resilient life.
