Differences Between Professional and Collaborative Versions

Question:

My understanding of the RetireWare software is that the Professional Version is used by the financial professional to prepare a retirement plan for the client.  The client is then not able to access the plan to update its progress. Is that correct?

My understanding of the RetireWare software is that the Collaborative Professional Version is used by the financial professional to prepare a retirement plan for the client. The client is then able to access the plan via the web to update its progress. Is that correct?

Answer:

Your understanding of the difference between the Professional and Collaborative versions is correct.

With RetireWare, you will get a financial plan for retirement that includes a cash flow forecast, odds of success, assessment of the exposure to each of the main post-retirement risks. The output is the same regardless of the product between the Pro and Collaborative version. Note that with the Collaborative version your users get a simplified version and reports in order not to overwhelm them with too much complexity and details.

The Pro version is more suitable if you want only to create reports and transmit a PDF to your clients. If you want to build a user base via referrals, then the Collaborative version is the way to go.

By: RetireWare / Equisoft On 4:31 PM

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RetireWare Versions and Calculations

Questions:

1. What is the difference in the level of detail and complexity of analysis in the retirement plans between an individual user and an advisor user besides the number of different plans that can be created?

2. What do you do for tax rates?

3. Can I see reports that separate my registered investment accounts from the margin accounts? Does the margin acct report show the adjusted cost base as well as the projected market value?

4. Can I update the plan annually by entering say December 31st market values?

Answers:

1. There are three version: individual (DIY), Professional and Collaborative. The retirement plans are identical, only the number of files vary. In addition, you can provide online access to files to clients and prospects.

2. The retirement forecast uses accurate income tax in the calculations.

3. The cash flow for each type of assets is shown separately in detailed tables in the results. The margin account does not show the evolving adjusted cost base (ACB) over the years, but the calculations do take into account the ACB.

4. Yes, you can update the plan using the Update Wizard or accessing the detailed or quick planner at any time. If you don't use the Update Wizard, just ensure you revise the date of calculation to a recent date in the General Information page.

By: RetireWare / Equisoft On 4:31 PM

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Sources of Retirement Income

Question:

Under the “Sources of Retirement Income” it has “yes” next to Personal Residence even though I indicated for both my wife and me “Never” under “Financial Information – Principal Residence – Sell Principal Residence.”  Are the income projections using the value of our personal residence or not?

Answer:

Since you selected 'Never', there will be no sales taking place. If you had selected a year for the sale but left the personal residence unselected in 'Sources of Retirement Income', then the funds would not be used for retirement.

By: RetireWare / Equisoft On 4:30 PM

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Asset Allocation

Question:

Under Asset Allocation it states “The Investor Profile Questionnaire established that the following portfolio: Security might be the most appropriate etc…”

Do I assume that the RetireWare used a “Security” mix for my investments listed under Finances or will it use the “Selection of Rates in Economic Outlook?”

Answer:

The calculations use the asset allocation basis selected on the 'Asset Mix for Projections' tab on the 'Options' page. You can select an asset allocation based on one of the profiles, the current asset mix, or your own custom allocation.

By: RetireWare / Equisoft On 4:29 PM

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Copy Functionality

A new feature has been added today!

Now you can copy an existing file to do what if scenarios or try different retirement strategies and evaluate their financial impact. For example, you can copy an existing file and try a different retirement age, life expectancy or income goal with the new file.

The file copy feature is on the first tab of the File Manager (landing page after logging in).

Enter the file ID of the file you want to copy and click the Copy button. A message will confirm the successful completion of the copy operation, an your file will appear in the file list. You can then select it and work on the file copy. The word 'COPY' is appended to the last name in order to differentiate it from the original.

By: RetireWare / Equisoft On 12:56 PM

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Common Settings

Features Update

Data entry is made to be as uniform as possible for each spouse to make it easier to find all settings.

We have a new release in which we apply changes to both spouses to avoid the need to enter the same information twice in the following areas:

• CPP marital status
• CPP sharing and CPP sharing common years
• Pension income splitting
• Economic basis
• Monte Carlo settings
• Risk analysis settings

With this change you no longer have to change these common values for each spouse when you prepare a retirement plan that combines the financial information of both spouses.

If you make any change to these settings to one spouse, they will be applied to the other spouse.

By: RetireWare / Equisoft On 12:55 PM

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What Are the Odds Telling You?

How much is enough?

A big concern when starting retirement is knowing if the income goals are sustainable. This question largely depends on two factors: longevity and the amount of money available for retirement.

Assuming your planning horizon is long enough, say age 95, market returns are then the deciding factor that will determine your odds.

This is because over time the amount of money saved for retirement becomes a smaller piece of lifetime assets. As your assets grow, the amount of investment income becomes greater than the capital invested (your contributions each year toward the retirement nest egg).

Most of the investment returns depend on how capital markets perform, much less from investment manager outperformance. In other words, investment returns are mostly explained by the allocation of funds between the main asset classes.

A lot of sophisticated modelling (including our own) can help determine whether the income goals are affordable and sustainable.

Here are a few thoughts related to modelling in general.

Should we save as much as we can for retirement?

Capital markets are volatile. This means that the range of potential outcomes from any model of future investment returns will be wide.

Any realistic model is going to produce a number of disaster scenarios.  When combining a large range of possible outcomes with a reduced ability to generate more capital during retirement, we can often end up with uncomfortably high odds of running out of money early.

Planning for more savings or a lower lifestyle are foolproof ways to improve our odds.

How can I spend my last dollar on the day I die?

The range of outcomes not only include disastrous possibilities. On the flip side, there is a chance that you will reap spectacular returns over the long run.

If you experience this as you get older, you can revisit income goals and apply windfalls to improve your lifestyle going forward.

It's better to be conservative at first and increase spending later if the money is on the table than the other way around. This way you take advantage of a windfall if it occurs, and keep spending conservatively if it doesn't.

Why not take risk away and invest in GICs?

You can remove the unpredictability of returns by getting guaranteed investments returns. For example, if you invest in GICs, you will know what you can earn and your range of outcomes will be much narrower.

But your retirement plan may no longer be affordable. The magic of investing part of your assets in equities is that the portion of lifetime assets coming from investment returns greatly exceed the capital invested for retirement.

Why trust a model when the future is unpredictable?

A model shows us what might happen. We cannot predict future investment returns, but we know that annual returns will form a pattern of good and bad years.

Outcomes from a model depend on assumptions, in particular those for expected returns and volatility. Volatility is the amount of variability that can occur for each asset class and is used to reproduce the unpredictable swings in equity returns.

With these ingredients, the model will produce a  range of potential outcomes. The range can be frustratingly large, but its value lies in providing insights into the sustainability of the retirement plan.

A model will determine the odds of success and failure.

But for the model to be even more useful, we can monitor results regularly as they unfold by re-evaluating our financial position and recalculating the odds.

Monitoring the trend will give you peace of mind, so update your plan every quarter or six months and make sure the odds remain on your side.

By: RetireWare / Equisoft On 9:10 PM

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