Dec. 8, 2013 4:32 p.m. ET  When you're saving for retirement, it's fairly easy to measure your progress. You compare your actual return with your expected rate of return and look at the total value of the portfolio. If you aren't getting your expected rate of return—and if your portfolio's projected value falls short of your target—well, your plan is failing.  But what happens when you're living in retirement? How do you measure success or failure then? There are, of course, several methods for doing so. But a recent survey by Russell Investments, a Seattle-based asset manager, shows that financial advisers don't agree on the best approach—and that some could be flying blind when assessing your nest egg. Here are a few techniques to consider:  It's a simple approach, says Rod Greenshields, a chartered financial analyst and consulting director for Russell. You're trying to preserve principal and only spend interest and dividends. So unless your plan calls for dipping into principal, having less money in your portfolio at year-end than you did on Jan. 1 suggests your plan isn't working.  In Russell's survey, 34% of advisers—the largest group—favor this approach.  But it has its shortcomings. For one, investors and advisers develop an "unhealthy focus on chasing yield at all costs to get the income stream they need," Mr. Greenshields says. What's more, this method may not necessarily match an investor's actual spending needs very well, nor does it address the risk of possibly outliving your assets; odds are high that you will have to spend down principal over the course of your retirement—especially if you live past your life expectancy.  "Attempting to assess the success of a retirement-income strategy is much more complex than relatively simplistic portfolio goals," says David Blanchett, head of retirement research at Morningstar Investment Management, a Chicago-based provider of advice and managed accounts.  Here, you review whether your portfolio's actual return met or exceeded your required return. Fall short of that goal, and the income plan is a failure.  But again, simplicity isn't necessarily a virtue. "You might be too tempted to increase risk if you pay too much attention to portfolio return," says Michael Finke, a professor and coordinator of the doctoral program in personal financial planning at Texas Tech University. "And risk means a higher chance of both success and failure."  A more sophisticated way to measure the success of a retirement portfolio is the one used by large pension plans. You compare what's called the actuarial present value of your assets and liabilities. The twist: Instead of looking at current assets and liabilities, you look at the value of all your expenses in retirement as a lump sum as compared with the value of all your assets as a lump sum.  Take a married couple where the husband, 69, and the wife, 68, have an after-tax portfolio of $1 million, an annual Social Security benefit of $25,000 with a 2.5% cost-of-living adjustment, and a pension of $10,000 a year with a 75% survivorship benefit and no inflation adjustment. That income stream's present value would be $588,686. Add that to the value of their portfolio ($1 million), and you get $1,588,686 in total assets, in today's dollars.  On the liability side, if the couple wants to spend $60,000 a year in retirement, after taxes, with a 2.5% cost-of-living adjustment, they would need $1,402,156 in today's dollars to fund their living expenses.  In essence, investors with a surplus are in good shape, while those with a deficit don't have enough to pay their expenses in retirement. The latter likely would have to adjust their savings, investments or projected expenses.  Few advisers—just 15% in Russell's survey—use this method, but Mr. Greenshields suggests that it works the best. A balance sheet uses today's market information and today's interest rates as a starting point, he says.  "Our take on this approach relies on using current interest-rate curves, specifically Treasury yield curves to reflect a 'risk-free' rate. Those are about the most robust predictions of the future you can get."  Still other experts say you shouldn't use any single method to assess your retirement portfolio, but rather a variety of methods. "I believe there are a number of measures, all based on forward-looking expectations," says Harold Evensky, president of Evensky & Katz Wealth Management, a Miami-based financial-planning firm, and an adjunct professor at Texas Tech University. Those measures include an investor's goals, taxes and economic expectations. And your portfolio would be a success if it lasts beyond your household's projected life span.  Adds Morningstar's Mr. Blanchett: "The obvious problem with a single metric is that retirement is something that is going to be 'experienced' over a relatively long time horizon, which could exceed 30 years for a couple."  No matter what approach you use, it is critical to gauge the performance of your portfolio continually.  "Measuring success shouldn't be a static concept but an ongoing process," Mr. Evensky says. And rules of thumb, he adds, are hard to come by. "Investors' lives are far too unique, markets far too uncertain, and—most frightening—politicians exist."  Mr. Powell is the editor of Retirement Weekly and a columnist at MarketWatch.com. He can be reached at encore@wsj.com.
Advisers use a variety of methods, ranging from simple to sophisticated. Here is a look at some of them.