T o d a y ' s r e t i r e e s f a c e t h e d a u n t ing task of determining appropriate investment and spending strategies for their accumulated savings. Financial economists have addressed their problem using an expected utility framework. In contrast, many financial advisors rely instead on rules of thumb. We show that some of the popular rules are inconsistent with expected utility maximization, since they subject retirees to avoidable, non-market risk. We also highlight the importance of

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... armarking-the existence of a one-to-one correspondence between investments and future spending-and show that a natural way to implement earmarking is to create a lockbox strategy. s t, t s t, and also satisfy the budget constraint:    s t, s t, 0