Jun 29 2012

Is Your Retirement Plan On Track?

Is Your Retirement Plan On Track?

Is your retirement plan on track? Do you have a written copy to refer to? Do you review it with your financial planner during your annual review?

What are the common questions clients want to know about their plan?

    • Do I have enough money to retire?
    • How long will my money last?
    • When can I retire?
    • How much do I need to save for my retirement?
    • Do I need a life annuity?
    • What is my optimum asset mix?

In the industry, I have found many retirement planning programs are very complex, time consuming, hard to update and difficult for the client to understand. The software program we use addresses those issues.

The key to the program is as follows.

Instead of presenting a “forecast” of your future financial picture based on assumptions which are unlikely to occur,  the retirement income plan we develop presents an  “aftcast” of potential outcomes based on actual market history. We have over 100 years of market data to simulate your plan.

The program uses probability but you don’t need to know statistics to understand it.  The plan is designed around a client’s income lasting  to age 95 with a 90% probability i.e. only a 10% chance of running out of money. Just remember that it’s the red (unlucky line) on the charts that follow.

What Does a Bad (inadequate) Plan Look Like?

In this chart below the plan is inadequate because the red (unlucky line) touches the bottom of the chart i.e. runs out of money at about age 78, rather than age 95. So what can be done?

What Does a Good Retirement Income Plan Look Like?

If a client has an “inadequate” plan, I recommend changes to alter the plan (examples are save more, retire later, lower expenses) until we get a plan where the red (unlucky line) lasts at least to age 95.

In summary, the retirement income plan I develop for clients is simple to understand, simple to adjust and gives clear direction on what options are available. If you don’t have a written retirement income plan or your financial planner is not providing regular updates, please contact me to learn more about this service.


Click here to view a case study and sample retirement plan.


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