Retirement Planning Software For Individuals – Making informed retirement income decisions is more difficult than making decisions about retirement savings, and millions of pre-retirement and retirement Americans currently do not have access to the expert professional advice they need.
The professionals who choose to work with the millions of middle- and middle-income clients of the future will be called upon not only to generate retirement income, but also to optimize the missing resources these clients bring to the table. , ensuring that key risks such as longevity, inflation, health care and long-term care are considered first.
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In 2003, the International Foundation for Retirement Education (InFRE) co-sponsored a study with SOA and LIMRA to evaluate retirement planning software. The software includes the retirement planning components of popular programs used by financial planners, proprietary software from some financial services companies, and basic consumer programs available on the Internet. The study applied data from six hypothetical case studies to all 19 programs and assessed the following:
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The study found that most programs view post-retirement planning as a continuation of savings planning. The ability to model income solutions is less than what planners need to optimize their retirement plan as well as address the key post-retirement risks that most preretirees and midsize retirees face. retirees. Results vary greatly from one program to another. In other words, the authors recommend that planners use several programs to eliminate second and sometimes third opinions.
The study was repeated in 2009 using 12 programs and more in-depth case studies. Software is categorized based on whether it is primarily for investment and portfolio management, how much to save for retirement, or how to manage retirement resources and risk. The goal is to redefine whether software tools adapt to the modeling needs of pension professionals to explore different alternatives for generating income plans when managing post-retirement risks. As before, six cases were used to compare the results. This time, however, they are designed to represent the largest six of the twelve middle and middle income market segments identified in the 2009 SOA Segmenting the Middle Market Study and test the following:
The purpose of the 2009 study was to determine the overall progress made by postretirement risk response programs in general since the 2003 study. Have more recent programs identified key risks related to longevity, inflation, health and long-term care, as well as various market risks, and if so, what options have been considered to address those this danger? Specifically, the study assessed recommendations made regarding:
A 2009 study found that there has been significant progress in professional programs, but there is still room for improvement in key areas of post-retirement risk:
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Most professional programs still do not allow stochastic modeling of major post-retirement risks, as planners may need to:
Researchers also felt the need for best practice guidance regarding the following during input and interpretation of results:
2. Should replacement rates be used? If they are used, what should be the target? Should target replacement rates be different for different groups of people, such as single people, couples with one worker, or couples with two workers?
4. What should be the planning period for modeling and how does it differ for the groups of people listed above?
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Overall, the 2009 authors, like the 2003 study authors, concluded that no pension software “should be used by retirees as the sole input for decision-making.”
It’s not the fault of the software companies that schedulers lack software. The fault rests entirely with us, the financial planning industry, for assuming that retirement income can be achieved for everyone through asset management alone, even knowing that the middle-class that baby boomers currently do not have sufficient assets and are insufficiently insured themselves. . multiple pension risks.
The results of both these studies point to the need for the financial planning and pension industries to take the lead in developing best practice guidelines for the middle-class and moderately developed markets available. of software companies in their models. A safe withdrawal rate of 4-5%, primarily an asset management retirement income strategy that works well for higher net worth clients, is clearly not enough for the mid – market. Key retirement risks such as life expectancy, inflation, health and long-term care need to be considered before making asset allocation decisions, as the limited resources of preretirees and midsize retirees need to be do double duty. Asset optimization for these market segments will require software that can simulate multiple strategies to help advisors decide which strategies potentially fit client needs.
Once best practices for post-retirement risk and return management are identified, client modeling and reporting strategies can be rapidly improved. Creating minimum income based on core and discretionary spending that also tolerates as much longevity, inflation, and long-term care risks as possible is best for the mid-market while the 4-5% rule is best for higher net worth clients. However, more research on modeling methods is needed. Software developers do not necessarily specify the standards that must be included to meet the client’s retirement income planning needs. His
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Betty Meredith is Director of Education and Research for the International Foundation for Retirement Education (InFRE). He oversees the integration of research and best practices into InFRE Certified Retirement Counselor® certification education and professional development programs to help professionals meet the needs of clients and employees in retirement preparation and management of income.
2 Retirement Planning Software and Post-Retirement Risks, Society of Actuaries and Foundation for Actuaries, Tuner and Witte, 2009.
4 Retirement Planning Software and Post-Retirement Risks, Society of Actuaries and Foundation for Actuaries, Tuner and Witte, 2009 Retirement planning made easy A retirement planner helps people who are nearing retirement quickly and easily determine when they will be able to retire in the future
Retirement Planner uses a newly developed simplified retirement planning method that incorporates knowledge gained from safe withdrawal rate research without the need to run complex and intricate Monte Carlo simulations.
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The result is a simple but surprisingly powerful tool that shows the client at what age he or she is expected to have a sustainable retirement portfolio based on their current situation, rather than asking the client for their desired retirement age and then redo the financial indicators. fact of reaching this age.
After modeling the client’s current situation, which takes less than five minutes and requires minimal data, “what if” scenarios that describe the steps or assumptions that need to be made to reach the desired retirement age are very easy to perform.
“I recently had my second retirement planning meeting with a client. In the first meeting, we analyzed their retirement picture using the (ACA Retirement Analyzer) and MoneyGuidePro. This time I used your retirement planner and they loved it. this!!! They rave about how easy it is to use and how clear the results are. Thank you so much!!” ~ Sheila P., CFP, CPA
“I downloaded and paid for Retirement Planner last week. I love this! I found it very easy to use and intuitive. Without even reading the instructions tab, I found myself entering data and changing assumptions. I really like how most of the fields can be changed to suit the client’s situation. Thanks for building such a great tool!” ~ Angela D., MBAG Watch your money. See all your accounts in one place, including your investments. And deepen our planning and analytics tools.
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See if your retirement savings are ready to retire on the target date and calculate your expected monthly income.
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