Summary of Retirement Income Planning Tools

Summary of Retirement Income Planning Tools

Tool #1 Portfolio Risk Comparison

This illustration tool is designed to show a client a before and after retirement portfolio pie using red, yellow, and green to illustrate the risk level of their current portfolio versus the risk lever of a recommended portfolio. For example, if a client currently has 70% of their retirement account in stock mutual funds and 30% in bond mutual funds, the risk could be illustrated with a portfolio pie showing red (high risk) for the stock funds and green (medium risk) for the bond funds. A proposed portfolio might show more money in the green category (low risk) and less in the red category (high risk). This illustration tool also allows software users to choose their own labels for defining the various levels of risk.

Tool #2 Retirement Income Plan Summary

The end result of the retirement income planning process should be a comprehensive summary of a client's projected retirement income for life. This illustration tool is perfect for summarizing all of your recommendations with regard to retirement income planning. Regardless of what financial products are being recommended for a client, this illustration provides a simple way for you to summarize all sources of income on just one or two pages. Projected income from Social Security, pensions, investment portfolios, annuities, or any other source can be consolidated and summarized in a simple, easy-to-understand format .... also excellent for illustrating laddering.

Tool #3 Can Market Volatility Impact My Retirement?

This illustration tool is designed to demonstrate the potentially negative results of making retirement income withdrawals from a volatile account of stocks and/or stock mutual funds. The illustration allows you to select any historical period in the stock market (using the S&P 500 Index or DJIA) to illustrate how a hypothetical account might have performed during that historical period, while making regular withdrawals for retirement income. It also helps clients to understand to potential value of repositioning some of their retirement assets to annuities or low volatility securities accounts so they don't have to worry about the volatility of the stock market.

Tool #4 How Long Will My Money Last?

This illustration tool provides a quick snapshot of how long a client's retirement nest egg might last, based on an assumed rate of return and an assumed annual income withdrawal rate (with annual cost of living adjustments if desired). This is an excellent tool for engaging a client in a discussion about income planning, even in a first appointment, because it allows you to adjust the variables in front of the client to see how the changes might affect the longevity of their retirement nest egg.

Tool #5 How Do Rate Changes Affect Bond Values?

Many investors do not understand that as interest rates rise, bond values tend to fall, and as interest rates fall, bond values tend to go up. Interest rates on corporate and municipal bonds have been near historical lows in recent years and many investors are wondering what might happen to the value of their bonds or bond mutual funds if interest rates start trending back up. This illustration tool allows you to input estimated bond values (individual bonds, bond portfolios, or bond funds), coupon rates, and years to maturity to see how hypothetical rate increases could potentially impact the value of bonds. This is yet another tool that can be used in a first appointment to educate a client on interest rate risk, especially if they have significant exposure to bonds or bond mutual funds.

Tool #6 Accumulating for Retirement

This illustration tool is designed to provide a quick snapshot of how much money a client could potentially accumulate for retirement, based on their current retirement account balances, the future contributions they plan to make, and an assumed annual rate of return. It can be used to illustrate both taxable and tax-deferred growth. This tool can be combined with the "How Long Will My Money Last" illustration to show a client a one-pager for the accumulation phase and a simple one-pager for the distribution phase of retirement. .

Tool #7 Hypothetical Income Rider Calculator

The Income Rider Comparison tool allows you to compare the projected lifetime income payouts for two hypothetical income riders, based on the client age, premium bonus, assumed "roll-up" rate, years of deferral, and an assumed income payout percentage once the income is turned on. It can be used to project the potential lifetime income from either indexed annuity income riders or variable annuity income withdrawal benefits.

Tool #8 What Does It Take to Get the Income I Need?

This illustration tool can be used to give a client a general idea of the rate of return required on a 401k account or other qualified retirement account in order to produce the same level of retirement income that's projected on an IUL or annuity illustration. Clients often have trouble evaluating whether or not using an IUL or an annuity income rider for retirement income compares favorably to other options for generating income and this tool helps with that analysis.

Tool #9 RMDs for Retirement Income

This illustration tool is designed to show a client a rough estimate of their required minimum distributions from their IRAs or other retirement accounts that require RMDs, based on their current age and an assumed rate of return on their investments.

Tool #10 Retirement Budget Worksheet

Income planning starts with a projected budget in retirement and this tool helps you to prepare both a current and future budget for your clients. You can use the default budget items or input your own customized labels for each budget item. For each expense item the worksheet allows you to select future increases (cost of living adjustments) on an item by item basis and also allows you select start and stop dates for each expense item, providing for total flexibility.

Business Planning Tools for Advisors

New Business Pipeline Analyzer

This tool is designed to assist advisors in projecting the number of new clients and the income generated from their marketing and sales activities. It is particularly helpful for advisors who utilize seminar marketing. This tool also helps advisors to see the dramatic increases in income that can result from small incremental improvements in their sales process (closing for appointments, conducting initial consultations, closing the sale, capturing a higher percentage of assets, etc.). A modest 10% to 20% improvement in all phases of the sales process can literally double an advisor's net income, without spending more money.

AUM Planner (5-Year Plan for Assets Under Management)

This tool is designed to assist the Series 65 licensed advisor in putting together a 5-year plan for gathering assets under management (AUM). Regardless of whether your goal is to achieve $5 million, $25 million, or $100 million or more in AUM, this planning tool will assist you in projecting your future AUM and quarterly fees.

NOTE: For a more detailed explanation of all of the illustration tools that are included in the software, refer to the Printable Software Tutorial and the short training videos that can be found on the data input page for each illustration tool.

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