News
Financial planning software to handle a phased retirement
Retirement is a continuum; a sequence of experiences that represent different needs. Writes Mike Werling in the article "Planning software for the Boomer Future", Boomer Market Advisor magazine, the wants and needs of a person at age 65 are quite different from that of an 80-year-old.
Gregg Janes, Vice President of Product Management Planning at EISI, agrees: "Good software has to be able to handle a phased retirement." Janes breaks retirement into three phases, characterized by the spending activity of the individual. Age 65-75 are called the 'go-go years', age 75-85 are called the 'slow-go years' and 85 and older are called the 'no-go years'.
Explains Werling: "As a person advances in retirement, he will travel less, spend more money on health care and begin thinking about what kind of legacy he wants to leave. That requires flexibility in planning from the advisor and the software he chooses."
Some of the other key capabilities advisors should look for in their software are Monte Carlo analysis, asset distribution, asset allocation, risk analysis (longevity, investment, inflation), expense assumptions, and cash-flow analysis.
Janes suggests that unless planning software can analyze the best order in which to distribute assets, they can be used up too quickly, and there could be severe tax implications. He also says that Monte Carlo is a must-have for its ability to perform a stress-test on the plan.
For more on the attributes advisors should be looking for in their financial software, read the article in Boomer Market Advisor magazine.
