How does the TIFIN Wealth's Retirement Calculator Work?

The first step is to estimate the total wealth needed if a client were to retire at their desired age; displayed as “Required Wealth”. Applying calculated social security benefits, a total shortfall of spending over income is found for each year in retirement. Calculated state and federal taxes increase these shortfalls under the assumption the client’s retirement account is pre-tax. These shortfalls are indexed to the client’s retirement-day dollar value and aggregated into the total required wealth. This calculation takes the following inputs to estimate income and expenses of a client’s family in retirement.

Age • Retirement Age • Life Expectancy • Spouse Age • Spouse Retirement Age • Spouse Life Expectancy • Annual Household Expense • Annual Expense Post Retirement • Annual Healthcare Expense • Social Security Start Age • Social Security Income • Spouse Social Security Start Age • Spouse Social Security Income • Inflation • Health Inflation • Annual Income • Spouse’s Annual Income • Retirement State

Income and expense events may be added at any point within a client’s lifespan. The ensuing effect will either increase or decrease the accumulating account balance or the retirement need appropriately.

For the accumulation phase, the goals-based approach combines a client’s stated initial balance, savings rate, and savings growth rate to build contributory cashflows. These cashflows are grown in an account invested according to the portfolio selected in step 4.

Select a client: click Assessments > click Goals to then View Results. This will show the client’s current portfolio intersected with advisor-controlled capital market assumptions to generate an average return and volatility for their retirement portfolio. If a current portfolio is not provided, generic portfolios with different weightings of equity and fixed income are used. These portfolios are filtered according to the client’s risk tolerance to find the best approximation of a generic, risk-appropriate retirement portfolio.

Finally, the selected portfolio, contributory cash flows and Required Wealth are used in a probability calculation to get the Odds of Achieving Required Wealth.

Select a client and click Recommendations to view a recommended portfolio. Steps 4 and 5 are repeated, however, the portfolios available to the optimizer are replaced with the advisor’s subscribed models within the Model Marketplace.

Click Proposals to preview an investment proposal for the client. Click Generate Proposal in the bottom right corner to download a .pdf file that outlines all inputs and results from the retirement calculator in an easy to read format.