Ensuring a reliable, lifelong income is one of the most complex challenges retirees face. Beyond Social Security and traditional pensions, most retirees rely on investment portfolios and home equity to fund retirement—often requiring assets to be sold over time. This creates the “decumulation problem,” described by William Sharpe as one of the toughest issues in finance.

  

Retirees must manage several key risks: longevity risk (outliving assets), sequence of returns risk (selling assets during market downturns), and spike expense risk—unexpected, large expenses that disrupt financial plans. While longevity and market risks are well studied, spike expense risk is gaining attention, particularly because its impact is greatest when asset values are low.