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Will Your Multi-Million Dollar

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Retirement Income Needs?

Deciphering The Mystery Of Retirement Income

Deciphering The Mystery Of Retirement Income

By: Haitham “Hutch” Ashoo, President & CEO, Pillar Wealth Management

© 2023 Pillar Wealth Management, LLC. All rights reserved.
No part of this publication may be reproduced or retransmitted in any form or by any means, including, but not limited to, electronic, mechanical, photocopying, recording, or any information storage retrieval system, without the prior written permission of the publisher. Unauthorized copying may subject violators to criminal penalties as well as liabilities for substantial monetary damages up to $100,000 per infringement, costs and attorney’s fees.

The information contained herein is accurate to the best of the publisher’s knowledge; however, the publisher can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. Situations mentioned in this guide are drawn from real-life examples but may have been changed or expanded to illustrate special points the authors are trying to make and to protect the privacy of the clients involved.

Pillar Wealth Management, LLC


Regardless of how you built your multi-million dollar portfolio, your ultimate focus is most likely on how much you can generate in retirement income without running out of money before you pass away. I’ll be sharing the story of a business owner selling their business to create their nest egg for generating life-long retirement income. However, how they built their nest egg vs. how you did it is not relevant. Whether your portfolio is $2 Million or $50 Million is also not the key point. The biggest takeaway is the process and plan being utilized for a high probability of success, which you can implement for your life-long retirement income.

In this report I will be sharing and revealing my retirement income process, which I have developed over my 30+ years advising affluent families. Amongst other things, I will explain how my current retired clients receive their retirement income as an automated monthly deposit into their bank account, just as if they were still working and receiving a regular paycheck. I will also share with you some of the mistakes you should avoid when planning for life-long retirement income.

Let’s begin:

Bill and Jennifer Edwards, a couple in their mid-40s, had built the company from scratch and carved a narrow but very profitable niche in the orthopedic medical devices field. A competitor made a very attractive offer on the business from a valuation standpoint that would result in a net $13.4 million, after taxes and transaction costs.

The offer was appealing to the Edwards family as Jennifer had developed some health issues, and the idea of spending more time with their teenage children before they went off to college was very appealing to both of them after years of 60-hour weeks while the children were young. Retirement was only a few weeks away when the Edwards had serious reservations about going forward. Their issue: “Will we be able to generate enough retirement income to sustain us for the rest of our lives and allow us to achieve our life-goals?”

They quickly arranged a meeting with their M&A, attorney, and CPA. The M&A assured them they were getting at least fair if not better-than-fair market value. But then Jennifer said, “That’s not what we are asking. We know we are getting market value, but will we be able to generate enough retirement income to happily sustain us for the rest of our lives?”

Bill had run a “straight-line” projection at an 8 percent return on the sale proceeds, considering their expenses and assuming a 3 percent inflation rate. It looked like it would work – but he also knew such straight-line projections assumed there would be zero risk to the investments – and that was not reality! In addition, the negative returns of 2000-2002, and the great recession of 2007-2008 provided little comfort that his analysis had any validity, so they were not willing to bet their future on it.

Bill also didn’t have much confidence in the plans their financial advisor had delivered, basing results on past money manager returns and a one-time plan which was drawn up, but that would sit in a drawer after implementation, waiting for the next financial surprise to make it obsolete! Bill knew Black Swan events WOULD occur again and again in different forms. He also knew his family’s future goals WOULD change.

Bill wanted a process which accounted for all of life’s changes – both expected and unexpected. Whether that Black Swan was like the great recession of 2008, the terrorist attack of 9/11, changes in their personal situation, Wars, Political and Geo-political events, or market volatility, he thought the plan should account for such events.

So, how can you and the Edwards family answer such big questions? After all, the stakes are massive if you get it wrong! That’s what we’ll discuss next.

Bill and Jennifer Edwards revealed the following facts and objectives (in today’s dollars). Don’t let these figures throw you off and definitely don’t use them to try and extrapolate your own scenario.

Retirement/Financial independence at age: Bill – 45, Jennifer – 42

Life expectancy: Bill – 92, Jennifer – 94

Amount to leave to heirs: $3,800,000

Required after-tax income: $574,000 (annual)

Assumed inflation rate: 3 percent

Using the above information, we would start by modeling and analyzing 1,000 lifetimes of investing, including the potential for markets producing results even worse than the Crash of 1929 and the Great Depression. These models and analyses allow us to determine if our clients have a high enough probability of achieving their goals while avoiding unnecessary investment risk and without undue sacrifice to their retirement income.

The result of such modeling and analysis for the Edwards’ resulted in an 82 percent confidence of exceeding all of their financial goals and objectives. An acceptable range, when we model such scenarios, is between 75 to 90 percent. If over 90 percent, clients are either making unnecessary sacrifices in their retirement income and/or could reduce the risk of their portfolio. If the probability for success is below 75 percent either the goals and objectives are revised or we advise you to make adjustments. This gap analysis is always the first critical step in developing your retirement income strategy.

In the Edwards’ situation 1,000 simulations generating random returns were evaluated. Their portfolio met their retirement income goal and had a targeted ending value of at least $3,800,000 at age 94 in 823 of these periods. This is an 82 percent rate of success.

Confidence Analysis

However, in 140 of those periods (14 percent), their plan not only failed to achieve the desired ending value of their portfolio but also ran out of money during their life. While the Edwards had an 82 percent probability of success, they also had a 4 percent probability of being “underfunded.” In their case, this indicated that while their lifetime cash flow needs would be met, they would have a 4 percent probability of leaving less than their goal of $3,800,000 (today’s dollars) to their children.

Jennifer was highly concerned with the 14 percent probability of failure, which means just that – their retirement income objectives and life-goals would not be met and they would run out of money during their lifetime.

How do you solve for this? In the Edwards’ case they understood that this analysis is updated on a quarterly basis as part of the retirement income review process. They understood that life and the markets were full of change and that no plan drafted today could predict and hold true till the day they both died. However, by quarterly monitoring their progress toward goals, like a plane’s computer which is constantly adjusting the path to the destination, the Edwards hoped to make minor adjustments on their journey to achieving their retirement income dreams.

Bill stated to Jennifer, “The way I understand it is that this modeling and analysis will be updated quarterly. If we dip below the 75 percent success rate, we will make an adjustment at that time to put the program back into the success range rather than letting the plan fail at a later time. The adjustment may be as small as us living on $500,000 for a year or two until things improve or as big as downsizing our home when the children are on their own.”

Bill’s conclusion was right on target. The goal is to quarterly monitor progress and make adjustments as necessary, reacting to real-life events as well as changes in goals and objectives. The result of this analysis was that the Edwards were able to confidently go forward with the sale of their business and look forward to their new lifestyle.

Given today’s market volatility, one of the most important things you can do is ensure that your retirement income strategy is solid and has a high probability of long-term success. It goes without saying that every family has different needs and a customized scenario must be put through the process. Depending on your portfolio size, be it $2 million or $50 million, the figures will likely be much different than those of the Edwards family.


The portfolio we model for you can be compared to a plane—if the plane you fly in a simulator is not the same plane you will actually fly, then the real life outcomes are unlikely to match your simulated scenario. Furthermore, using this process, not only do we monitor your retirement income and portfolio, we are also evaluating your confidence and probability levels of attaining them—that is, what plane is best-suited to reach your final destination when things like safety, performance, and operational expenses are considered. In our view you must manage your money in this manner to help you avoid unnecessary risks and expenses while optimizing performance.

It is therefore imperative to ensure that you are correctly modeling your portfolio/investments— “simulating” what we intend to fly—or the results will undoubtedly be inaccurate. Unfortunately, we see too much of this going on but the clients and even many of their advisors are unaware of this critical mistake.

Ultimately, here’s what you want to know: How well can the advisor help you pursue your lifetime retirement income goals, in the most comprehensible way possible, whether you are on target for achieving them, and whether any adjustments need to be made? This is more than simply providing you with a rundown of your percentage of return. Just about anyone can send you an investment report showing your performance for the last three months, year, or five years. But performance is not an indicator of whether you are on track to achieving the lifestyle and retirement income you have set out for your family.

Wall Street would like you to believe that performance can tell you those things. It cannot. How well your investments performed in the short term compared to the Dow or S&P 500 does not explain how well you are proceeding toward your overall objectives.

Affluent families know instinctively that chasing performance is folly. You do not want to put your wealth unnecessarily at risk—and you want an advisor who understands that. You want an advisor who understands the real meaning of success to you and the true path to securing your lifestyle and retirement income needs.

Just as important is that you avoid investment methodologies which do not stand the test of time—commodities or futures strategies, gold, dividend-paying stocks or similar sales pitches, Dow 10 or Dow 5, hedge funds, etc.— which may promise to get you there a little faster, yet might also leave you short or even bankrupt! Dependability and safety are critical to us, and these same reasons are why many planes use Rolls Royce engines. We apply this same approach to the investment style and portfolio we manage for our clients.

It’s important to recognize that it is very difficult to be good at all things… because most of us are not wired from an emotional standpoint to effectively develop and maintain a retirement income strategy.

If you have questions and would like to take advantage of my complimentary “Unbiased Wealth Analysis,” CLICK HERE to schedule your 30 minute meeting with me.


Let’s begin with some tenants for retirement income investing.

To start, we must understand that your money managers or wealth managers cannot control the markets. In addition, they do not have a crystal ball. No one does. However, if you think about this long enough we suspect you’ll conclude that some managers or advisors truly believe they know where the economy, the markets, inflation or interest rates are heading! Any such attitude should raise big red flags since the bets they are making – and rest assured these are bets – will affect your retirement income! Granted the bets may pan out, but what if they don’t? The biggest victim of such bets is usually YOU!

Furthermore, individual investors, money managers, and wealth managers cannot allow their human emotions to cause them to act opposite of how they should act. If emotions are allowed to lead your investment decisions, you will probably experience damage to your portfolio and to your retirement income needs. You and your advisors need a disciplined strategy for investing without the emotional roller coaster.

Based on data from the Investment Company Institute, Morningstar Associates, and Lehman Brothers, many investors buy high and sell low. For years, private money managers have been marketing their products using long-term results for a lump-sum investment. Their results typically show that their annualized returns have outpaced their designated benchmarks and inflation.

They are implying that if investors purchase fund shares and hold them for similar time periods, they may achieve similar results. Based on what? The past? Of course, reality is quite different. Based on analysis of actual investor behavior over the 20 years ending December 31, 2007, the average equity fund investor earned an annualized return of just 4.48% – underperforming the S&P 500 by more than 7 percentage points.

Investors Returns For the Period Ending

Today’s investors face startling new realities. Investment strategies that appeared to work for 20+ years have now been proven to fail (i.e. Madoff, Stanford… even Warren Buffett wasn’t immune)! Investors who thought they were properly diversified and allocated have suffered huge losses during the 2008 great recession when so many asset class values capitulated. Investing based only on rate of return is investing based on past performance. But, as every professional money manager must tell you, past performance does not guarantee future results.

We therefore recommend building your portfolio and selecting investments based on achieving a high degree of confidence (75%-90%) in reaching or exceeding your retirement income goal.

Here are some factors we seek when building our clients’ retirement income portfolio:

  • Reduce “betting” against market performance
  • Provide tax efficiency
  • Seek low capital gain distributions while minimizing short-term gains (taxed as ordinary income)
  • Deliver low turnover
  • Lower bid/ask spreads, and lower commissions (which are earned by the custodian, i.e. Fidelity, Schwab, TD Waterhouse, etc.)
  • Take human emotion out of the investing process.
  • Reduce investment expenses (lower expenses equals more money in your pocket)
  • Consistently maintain market segments. You cannot afford to have investment managers in and out of different asset classes.
  • Over 90% of performance variances are due to asset allocation and the amounts you have in stocks, bonds, and cash. Asset allocation is king.
  • Rebalancing is necessary to keep portfolios on the “Efficient Frontier.”
  • Global diversification can reduce volatility.


The retirement income process should enable you to control your finances as the trustee of your financial future. It’s a completely new advice process that helps you discern if, based on your net worth, your financial security and lifestyle are over-funded or under-funded for the expected retirement income needs.

The Series of Consultations is Customized to You

You should be looking to build your portfolio of investments to achieve a high level of confidence in exceeding your retirement income and life-goals without sacrificing your lifestyle. The goal is to receive recommendations on switching to a different portfolio model – not based on emotions, gut feelings or some crystal ball – but based on your confidence in achieving your retirement income and life-goals.

In our case we deliver a comprehensive quarterly wealth management plan that monitors your forward progress. As financial markets, financial goals, and priorities change, we monitor your progress on an ongoing basis. Our wealth management process identifies in advance the future portfolio values needed to maintain balance between confidence and undue sacrifice.

This monitoring process enables us to track where your current portfolio falls so we can alert you of potential problems, or help you achieve additional goals you may have. Additionally, this dynamic process recognizes that throughout your life, goals and priorities change.

Many investors are puzzled at how to generate an ongoing and consistent retirement income stream from stocks, mutual funds, and bonds, which would support their retirement lifestyle. This is one of the services we put in place for our retired clients to allow them to know that their bank account will be refilled every month with a pre-determined sum that has been agreed and planned on, without them lifting a finger. It has taken us years to perfect this process and it is a lot of work… but our clients love it.


The below tables reveal how two investment rates of return scenarios with the same risk and the same cash-flow (i.e. savings or expenditures) may net you MORE INCOME/ WEALTH with the LOWER RATE OF RETURN scenario!

If you are still investing for rate of return you may be shooting yourself in the foot! What we focus on is investing for higher retirement income and wealth for our clients.

Would you like to take advantage of my complimentary Unbiased Wealth Analysis? CLICK HERE to schedule your 30 minute meeting with me.



Imagine you’re playing blackjack. You’ll try to get your card count as close as you can to twenty-one without exceeding that while also totaling more than the dealer. If your cards total twenty, you are happy.

Not too many people in their right mind would try to better that play, because the only card that could help would be an ace. Imagine, though, that you do have twenty in your hand, and you decide to ask for a card. Your odds of getting the ace are 7.69 percent. That’s not a risk you would take if you were interested in winning.

And yet you have better odds of getting that ace than of getting a mutual fund or money manager who will continue to outperform, since those odds over ten years are only about 2 to 4 percent. About 98 percent of money managers and hedge funds basically underperform the market over 10 years! Only 2 to 4 out of every hundred money managers and hedge fund managers out there might be justifying their existence. And those 2 to 4 percent might not be the same ones who will outperform in the next ten years.

Affluent investors, like all humans, can react emotionally and tend to follow the flock. If a friend or relative joins a money manager or a hedge fund, you might tend to seriously consider that choice for yourself.

If a money manager is hot, that is what you will hear about in the news, and that is where the money tends to go. Families put their money into the latest and greatest. It is not hard for Wall Street to sell financial products when the returns are high.

But can the managers keep it up for a decade or more? Again, we bring you back to the reality that only 2 to 4 percent of them seem to beat the market, and those who do will come and go. That makes it extremely difficult to develop a cohesive long-term plan.

According to the 2012 report titled “S&P Indices Versus Active Funds Scorecard” (SPIVA), the S&P 500 growth index outperformed 89.9 percent of large-cap growth funds. The S&P small-cap growth index outperformed 95.5 percent of small-cap managers. The evidence is clear that money managers often charge high fees and generate high taxes and nonetheless underperform.

A report in 2012 specifically pointed out that hedge fund managers, for the fifth year in a row, by and large had underperformed the S&P 500. Hedge funds had fared no better than mutual funds in beating the indexes.

The financial news site Zero Hedge reported that the average hedge fund returned 8 percent in 2012, as opposed to 15 percent for the S&P 500. The following year, hedge funds returned an average of 7.4 percent while the S&P soared by 29.6 percent.

Those who advise affluent clients had better be prepared to explain why it would make sense to subject them to that. A hedge fund typically charges a 2 percent fee and 20 percent of the profit. And a California client may pay a tax of about 50 percent on top of that. When you weigh such a return’s effect on your wealth, you are bound to have second thoughts.


According to Morningstar, at the end of the last decade 72 percent of all mutual fund deposits—about $2 trillion in all—were flowing into four- and five-star funds. That is clear evidence of the human propensity to join the flock. Investors feel drawn to the year’s standout managers and to the funds with the brightest constellations.

A study by the Burns Advisory Group took a look back, starting in 1999, and for the next decade followed the investors who bought into five-star funds. How had the funds performed for them, and what became of those funds? Of the 248 stock funds with five-star ratings at the start of 1999, only four had kept their ranking after ten years. In other words, 98 percent of those five-star mutual funds did not keep their five-star rating over the ten-year period from 1999 to 2009. This is the history of mutual funds, and we believe hedge funds and private money managers are no different.

We believe the low-cost, market-type investments will outperform about 98 percent of money managers and hedge funds over the long term.

So think twice before you jump on the money manager bandwagon! It might not be a good strategy when it comes to protecting your lifestyle and portfolio.


Asset allocation and diversification are time-tested principles. They are so essential to investment success, although often misunderstood, that it’s important to understand exactly what they are.

To start with, they are two different things. To diversify simply means you strive for a variety of investments within a portfolio. To be properly asset allocated, however, is more specific: you are determining what percentage of your portfolio should be invested into each of the variety of asset classes.

An asset class does not mean, for example, industrial stock versus blue-chip stock versus penny stock. Rather, it means equities as a class—and that class is just one of a number13 of others that include bonds, cash, international equities, commodities, futures, real estate, venture capital, and so on. Within each of those asset classes, you should also diversify—it is important that you not concentrate too much money in a single asset class or investment.

David Swensen, the brilliant institutional investor who grew the Yale endowment portfolio from $1 billion to more than $23 billion by achieving 13.9 percent average annual returns across 30 years of bear and bull markets, says that asset allocation is the most important investment decision of your lifetime. It is how you succeed. In fact, he believes attempts at market timing and at choosing securities and managers can ultimately have a negative effect on a portfolio. They easily can result in fees, taxes, and losses, which we fully agree with.

A good way to understand the significance of asset allocation is to consider what is known as the Sharpe ratio. This ratio, developed by Nobel laureate William Sharpe, helps you determine how much greater a return you are receiving for the additional risk that you’re taking on. You want the highest return for the amount of risk that you are accepting the higher the ratio, the better. The Sharpe ratio is, in short, a means of measuring risk-adjusted return.

Another guideline is known as the “efficient frontier.” This calculation reveals to investors how high a return they might expect from their portfolio based on how much risk they are willing to accept. The frontier is plotted on a graph. One axis of the graph is the expected rate of return, and the other axis is the investor’s risk. The graph indicates the portfolio’s potential return—that is, its “frontier”—given the degree of risk.

By charting the optimal return, it can readily reveal if a mix of investments is inefficient and falls short of that. In other words, it can show you if you are taking on too much risk and not reaping the benefits. It can also show whether you could earn a greater return with the same amount of risk.

Finding the right balance of asset allocation is a matter for both halves of the brain. It is both science and art. It involves taxes and accounting, of course, but also risk tolerance and lifestyle.

A principle that cannot be repeated too often is that too much concentration in any particular asset class or investment is unwise and should not be tolerated. It’s not hard to understand why that is such a huge problem. If you go to Las Vegas and put $100,000 on the number six at the roulette table, you are taking a highly concentrated risk. No sane person would imagine it to be otherwise. You can cut back that risk dramatically by spinning for black or red and getting closer to 50/50 odds of winning, but you are still subjecting a good pile of money to a high probability of losing it all.

We don’t know anybody who would invest a portfolio even to the level of black and red on a roulette table. If you are worth $200 million, it might be acceptable to subject $100,000 to that sort of concentrated risk, but to do that to your entire portfolio would be financial suicide.

If your wealth is allocated into a primary, concentrated investment, is that concentration putting your family’s wealth at risk? Is it time to unwind some of that investment? Do you need help looking at this issue objectively?


Too many times the true risks are unknown to affluent investors; usually because they are trusting and feel their advisors have everything under control, until the markets shake it out in a very vicious manner!

Too often, and too late in the day for those investors, we hear about what we’d consider repeating events, being termed “never before” surprises. All those unpleasant surprises, which repeat in other forms or fashion, caught too many investment professionals totally off guard to the detriment of their clients.

Since no one can predict when the next crisis will occur, your goal should be to put in place a plan which accounts for such risks… before they occur.

Whether you have the slightest doubt or feel comfortable, you owe it to yourself to obtain an unbiased evaluation of your retirement portfolio risks (known and unknown, to you and your advisors) and how you could better secure your retirement income and lifestyle.

What you don’t know might hurt the most. We hope this report will help you take action to be better prepared for the rest of your life.

If you’d like to take advantage of my complimentary Unbiased Wealth Analysis, CLICK HERE to schedule a 30 minute meeting with me.


Hutch Ashoo and Chris Snyder are co-founders of Pillar Wealth Management, LLC, (www.PillarWM.com) an independent, fee-based, private wealth management firm in Walnut Creek, California. The two own 100 percent of the firm and have a combined half-century of wealth management experience. Their firm is focused on delivering customized private wealth management advice focused on retirement income and life-goals.

It has been their privilege to work with affluent families, helping them achieve a positive change in their lives and finances.

As their clients’ go-to advisor, Mr. Ashoo and Mr. Snyder provide a single financial solutions resource for their clients’ financial needs. In their role as their clients’ go-to advisor they are initially brought in to help with investment management, strategic planning, asset allocation, risk control, investment policy, and tracking of the family’s retirement income.

They begin working with clients by investing the portfolio according to the investment policy. By then they understand the client’s income needs, the expected outflows and inflows, the tax ramifications, and the need to manage the portfolio with tax efficiency. For many advisors, this is where the hard work stops and the investments go on auto-pilot. The investment policy statement is put in the drawer to sit there until the next Bear market, when the advisor pulls it out and says it is time to start a new plan.

At Pillar Wealth Management, LLC, it is understood that Black Swan events will challenge their clients’ financial futures—in the long-term markets don’t move upward in a straight line, and certainly a family’s life-goals may also change on a dime. They therefore plan their clients’ investments for the unexpected and advise accordingly.

Mr. Ashoo and Mr. Snyder are the published authors of the books T he Art Of Protecting Ultra-High Net Worth Portfolios And Estates; Beyond Wealth: Finding the Balance Between Wealth and Happiness; and the whitepapers: Exiting Strategies: The CEO’s Seven Critical Steps to Cashing Out of a Business, Managing and Preserving Wealth; Four Factors the Affluent Must Know to Avoid Financial Disaster and Secure Their Dreams; and Intelligent Investing: Making Smart Investing Decisions in Today’s Volatile Market.

They are published financial expert columnists in national journals and newspapers as well as legal and tax publications, and have been interviewed nationwide on radio regarding wealth management for the affluent. Mr. Ashoo and Mr. Snyder have lectured to thousands of individuals on private wealth management and business exiting strategies.

Their services are provided to a limited number of clients. They only accept a new client when they have determined there is mutual admiration and respect, and only if they can add substantial value to the client’s financial life or if you have questions and would like to take advantage of my complimentary “Unbiased Wealth Analysis,” click here to schedule your 30 minute meeting with me.

You can reach Hutch at [email protected]

Hutch Ashoo

Hutch Ashoo Co-Founder, Pillar Wealth Management, LLC

Pillar Wealth Management, LLC