Plan Assumptions and
Results
Quick
Results Full
Results
Success
Summary Investment
Asset
Percentile
Rankings Asset
Allocation
Details
Other
Results
Summary
of Cash Flows
Cash
Flow Details
Retirement
Income Need and Other Sources of Retirement Income
Percentile
Rankings
To view
completed sample reports, click
here.
Quick Results
There are three different types of Results screens: Summary, % Rankings,
and Detail.
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Success Summary Screen
The Success Summary graph is a quick and simple way to see in what percentage
of all of the periods that were backtested you achieve your stated Value
at Plan End. (The Value at Plan End was originally set on the Personal
inputs screen.)
When looking at the graph, the green
represents exceeding the stated goal at plan end, yellow equates to being
below the target value, but not below $0, and the red illustrates all
periods where the plan would have resulted in a negative ending value.
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“What
If” Scenario Testing
Clicking on the "Adjust Key Inputs" button
will bring up a pop-up screen that reflects the majority of the Key Inputs
from the prior screens. Based on your marital status selected from the
drop-down menu on the Personal Information input screen, one of two input
screens appears.
***Warning***
Alterations to any of the key inputs will be saved and reflected in the
actual input screens. |
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Percentile
Rankings Screen
The % Rankings Screen allows you to see the majority of the actual results
of the back-testing of the different rolling periods. This
screen was designed to give you an idea of the periods in which the plan
actually would have achieved the goal or value at plan end.
Since
most people are worried first about how much money they could potentially
have at the end of their plan, based on their plan assumptions, the page
defaults to show the results sorted from the top 3% (best ending values)
to the bottom (lowest 99% of all ending values. From here it is easy to
see what percentage of historical backtests would achieve the desired
wealth goal at the end of the plan.
We have
color-coded the results of the different back-tests to correspond to whether
the period produced a result that exceeded or missed the users’ stated
target goal.
For all
time periods that produced a negative ending value, the site will tell
you at what age the plan would have run out of funds and turned negative.
Sorting the % Rankings Screen
This screen will allow you to override the default sort, and instead also
view the data sorted based on the market period (which will then chronologically
sort the data, showing a time line of the results), or sort based on the
average return during the period that was back tested. |
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Questions About How to Read This Screen
If you have questions about how to effectively read this screen, click
on "Explain this table" at
the top of the chart, and a pop-up window will open, explaining in detail
the different columns on the screen.
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Details
Screen
The Details screen shows the specific path taken by the plan in any of
the specific back-tested periods.
The lines
on the graph show the path toward the ending value generated by that market
period, and all subsequent information for the given probabilities is
listed in the box. The information in the box beneath the graph corresponds
to the information given on the % Rankings screen.
If an
assumed return field is checked, the site compounds annually the rate
of the return, weighted for the person’s cash flows, and produces back
what the ending value could be, assuming the person receives the same
return every year. You will notice that the assumed return, pessimistic
return, and optimistic return lines, are generally very smooth when graphed,
reflecting the linear nature of the annualized calculation.
The lines
on the graph that correspond to the historical time periods will tend
to not be “smooth.” One thing that most people have learned about the
history of the financial markets is that they are never the same year-in-and-year-out.
Therefore the probability lines will reflect the volatility and randomness
of return associated with the person’s unique plan and pattern of cash
flows.
You can
graph up to five different probabilities and three fixed return scenarios
at a time using the chart below the graph.
After
having looked at the % Ranking screen, if there are particular probabilities
that you would like to see graphed, you may input them, and check the
corresponding box next to the probability. Clicking on "Save My Changes"
will redraw the graph based on your inputs.
Sensitivity
Analysis and What-If Testing
Like the Summary page, you can choose to alter the key inputs of the plan
to test the plan’s sensitivity. By
clicking on the "Adjust Key Inputs" button at the top of the
screen, the pop-up window will again appear, allowing modification of
any entries to the plan. Clicking the "Update Results" button
at the bottom of the window will recalculate the plan and redraw the graph.
***Remember
that all changes will be saved, so make sure that you remember what you
changed in case you want to go backwards***.
How
to Effectively Use the Details Page
This is the ideal screen to use for an on-line meeting between Investor
and Advisor. You can discuss your objectives, the financial plan, and
what your risk tolerance may be. |
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Full Results
The first section of the .pdf report will take the user through the different
key assumptions that were input for the plan. These
assumption pages will include:
Investment
Asset Summary
Asset
Allocation
Target Asset Allocation pages for pre-retirement (pictured) and post-retirement:
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Other
Results
Each of the Results screens from the site will be re-created in the print
out of the report. This
means that whatever probabilities you elect to have drawn or illustrated
on the site will be in the report. The
report will be generated in which ever calculation method you last employed
prior to generating the report (i.e. Success Summary, % Rankings, Details).
The Growth
Chart shows the path and the ending results for each probability or fixed
return projection that was checked on the Details screen of the site.
Total Plan Values Pages
The Total Values pages show the summary year-by-year information about
the plan for each probability or straight percentage assumption that was
graphed on the “Details” screen.
Starting with the plan year and the Primary
Client and Spouse Age, other columns on the chart include:
Net
Cash Need – reflected as a negative amount signifying the needed
withdrawals.
Cash
Surplus – the “net cash” number reflected as a positive value signifying
a contribution to the user’s assets.
Yield
– The dollar yield or investment income associated with the “Investment
Assumption for Taxes” information input in the site.
Capital
Appreciation – For fixed return assumptions, this will always be
a positive amount each year. For
the Total Plan Values pages associated with the historical probabilities,
this column will at times reflect positive appreciation and at time negative
market periods.
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Taxes
– Based on the Tax Assumptions input on the Tax Assumptions screen.
Ending
Values – The far left column reflect the ending values associated
with each year of that plan, and bottom row reflects that sum total or
ending value associated with the corresponding column. |
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Summary of Cash Flows
The Summary of Cash Flows page reflects how the net cash need or surplus
shown on the Total Values page was calculated. On
this page, the Net Cash Need/Surplus column is broken down into the specific
components that were input on the site: Contributions, Withdrawals, Retirement
Income Need, and Other Sources of Retirement Income. |
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The Summary of Cash Flow Graphic, illustrates
the same information as the Summary of Cash Flows page. Here
you will see the Total Cash Input into the plan and the Total Spending
Need, and the black line is the net of those two inputs.
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Cash
Flow Details
Specified Contributions
The Specified Contributions page shows
the detail of all of the planned contributions (savings) that you have
input into the site. (Naming
these entries as you create them will allow you to see the detail by savings
type.)
Specified Withdrawals
The Specified Withdrawals page also shows
the detail of all planned withdrawals that you input into the site. Education
Funding also appears on this page of the report. |
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Sources
of Retirement Income
The Retirement Income Cash Flow detail page shows year-by-year the retirement
income need, sources of retirement income and the net need (the amount
investments must provide).
In this
example, notice that the table begins the year that you retire. For the
first two years you have only your pension, and then beginning in the
third year of retirement your Social Security income begins to come in.
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In the above example the pension continues
to decline in value each year while the SSI benefits remain unchanged.
Also, the
Total Retirement Income Need remains unchanged because the report has
been run in Today’s Dollars (today’s spending power) and the assumptions
is that SSI and the user’s Retirement Income Need will both be adjusted
for inflation each year. The pension value continues to decline because
it is a fixed pension with no cost of living adjustments.
If the
report had been run in Actual Dollars , the pension would have remained
flat and the SSI and the Retirement Income Need would each increase every
year, reflecting the greater amount needed by the user to maintain the
same purchasing power.
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Percentile
Rankings Page
The Percentile Rankings page will be the same as the one that was last
viewed on the site prior to running the report.
Remember
that the report can be run to reflect the results of either the Historical Audit calculations
or the Wealth Simulator
method.
