Analyzer

Analyzer
Introduction
Application 1
Income Calculator
Application 2
Custom Strategy
Application 3
Cash Flow Report

INTRODUCTION

The primary purpose of the REST ANALYZER is to create and consider alternative retirement income strategies.

A strategy is comprised of five elements:

The total monthly income you are looking to generate based on your savings, Social Security, and other income sources.

The amount of annual increase in your total retirement income.

Social Security benefit commencement age (unless started).

Investment allocation between stocks and bonds.

Fixed Income Annuity purchase (if any).

A Strategy is then rated in two categories from a low of 1 to a high of 10.

Strength in achieving the income goal and annual increase you have selected

Strength in maintaining your retirement savings balance for liquidity and legacy goals

Whenever you change any of the five elements, it is likely one or both of the ratings will change.

THE REST ANALYZER WORKS IN THREE STEPS REFERRED TO AS APPLICATIONS:

DEVELOPMENT OF AN INITIAL MONTHLY INCOME AND STRATEGY

CREATING YOUR OWN PERSONALIZED RETIREMENT STRATEGY

CREATE A YEARLY PROJECTED CASH FLOW REPORT

THE REST IS DESIGNED TO ANALYZE A SINGLE LIFE.

INFORMATION IS PROVIDED FOR THOSE MARRIED OR WITH PARTNERS.

INTRODUCTION

Application 1 is used to develop a starting point for the creation of your retirement strategy.

You are prompted to input information regarding your age, health, retirement savings, Social Security, and other retirement income sources.

The REST will come up with an initial five element strategy as described in the previous screen.

The results from Application 1 are designed to provide a monthly income and strategy

that offers a high likelihood of success over your expected lifetime,

however this should be considered as a starting point in the creation of your personal strategy.

Application 2 will then allow you to alter any or all of the five elements and have it analyzed in both income and retirement investment balance potential.

If you are married or have a partner (click here)

ENTER YOUR INFORMATION

Please Enter Your date of birth:

The REST is designed for those age 55 or older

Social Security pay status:

Select Yes if you have already started Social Security or select No if you have not.

If you are age 70 or older this must be Yes.

Social Security payment amount:

Since your benefit has already started, enter the monthly amount you are entitled to.

If past your normal Social Security retirement date you should enter the benefit amount that would be payable if you started collecting immediately.

You can obtain this information from the SSA.

Gender:

Please select

Your health status:

There are 5 options ranging from very healthy to very unhealthy.

By selecting a healthier status, the likelihood that a monthly income goal will be achieved is reduced since it is projected that you will live longer.

Please assess your own health in very general terms by comparing your health to that of people of the same age as you.

For instance, a very fit 65-year-old (compared with other 65-year olds) with no known serious medical conditions might answer “very healthy”.

Retirement Savings:

Input the total amount of your current savings to be used to generate the monthly retirement income.

This should include IRAs, 401k balances, and other retirement savings.

However you should exclude any pensions, rental income properties or annuity contracts that provide fixed income.

They will be considered in the following questions.

Remember to exclude amounts that you need to earmark for emergencies, legacy or other dedicated needs.

Other Monthly Income Amount: (This is an optional field.)

This applies to those retirees that have pensions, guaranteed fixed income annuities, that will have some continued employment income, rental income, or wish to consider the impact of family support, a reverse mortgage or long-term care insurance.

If you complete the amount field, you will also need to indicate whether the income has already started and if not, the age it will start.

If it is temporary indicate the number of years.

If there is a guaranteed cost of living increase, you can include that also.

You will be able to include up to 4 optional income amounts.

Income Already Started?

Yes No

from age

If No, Please input the age it will start.

Maximum years to be paid:

for years

If the income is temporary, indicate the number of years.

Otherwise leave as zero.

Cost of Living increase percentage:

If there is a guaranteed cost of living increase, include that here.

2nd Monthly Income Amount: (This is an optional field.)

If you complete the amount field, you will also need to indicate whether the income has already started and if not, the age it will start.

If it is temporary indicate the number of years.

If there is a guaranteed cost of living increase, you can include that also.

You will be able to include up to 4 optional income amounts.

Income Already Started?

Yes No

from age

If No, Please input the age it will start.

Maximum years to be paid:

for years

If the income is temporary, indicate the number of years.

Otherwise leave as zero.

Cost of Living increase percentage:

If there is a guaranteed cost of living increase, include that here.

3rd Monthly Income Amount: (This is an optional field.)

If you complete the amount field, you will also need to indicate whether the income has already started and if not, the age it will start.

If it is temporary indicate the number of years.

If there is a guaranteed cost of living increase, you can include that also.

You will be able to include up to 4 optional income amounts.

Income Already Started?

Yes No

from age

If No, Please input the age it will start.

Maximum years to be paid:

for years

If the income is temporary, indicate the number of years.

Otherwise leave as zero.

Cost of Living increase percentage:

If there is a guaranteed cost of living increase, include that here.

4th Monthly Income Amount: (This is an optional field.)

If you complete the amount field, you will also need to indicate whether the income has already started and if not, the age it will start.

If it is temporary indicate the number of years.

If there is a guaranteed cost of living increase, you can include that also.

You will be able to include up to 4 optional income amounts.

Income Already Started?

Yes No

from age

If No, Please input the age it will start.

Maximum years to be paid:

for years

If the income is temporary, indicate the number of years.

Otherwise leave as zero.

Cost of Living increase percentage:

If there is a guaranteed cost of living increase, include that here.

Monthly income annual increase percent:

The default amount shown is the current inflation expectation of the Social Security Administration.

For Application 1 we will use the default Annual Percent.

However, it can be modified in Application 2 should you wish.

Annual Increase Percent Information (click here)

RESULTS

Please be patient, it may take 3 to 5 minutes to process your results.

You should only need to run this one time.

The REST application is testing hundreds of strategies with thousands of scenarios requiring millions of calculations.

Application 2 and 3 run very quickly

While you wait for the REST to do its analysis, you can take the attached quiz to assess your knowledge on some key retirement income issues.

The monthly income has been determined to be:

with an annual increase percent of:

This amount is only the starting point for you to develop your own retirement plan.

You will be able to modify the strategy in Application 2.

Assumed Annuity Purchase Amount:

This is the amount of the retirement savings to be used to purchase a guaranteed fixed income annuity.

Assumed Social Security Commencement Age:

The age assumed that you will collect Social Security if not already being collected.

Assumed Stock & Bond Allocation percentage: &

The amount of your investment balance to invest among a broad stock & bond portfolio.

The results are based on the following inputted data:

Date of Birth:

Gender:

Social Security Payment Status:

Social Security Amount:

Health Status:

Retirement Savings:

Other income Information:

INTRODUCTION

Application 1 may show a bias towards the purchase of fixed income annuities, delayed Social Security benefit commencement,

and conservative investments since it is focused on attaining a secure income amount through your expected lifetime.

Some retirees may not be comfortable with this strategy.

Application 2 is designed to allow modifications to the following:

(these are the 5 elements previously discussed)

The monthly income

The annual percentage increase in income

The asset allocation between stocks and bonds

The Social Security payment start age (if not yet being paid)

The fixed income annuity purchase amount (if any)

Note that the input for Application 2 has been prepopulated with results from Application 1.

There should be no reason to change any of the basic input items

(Date of birth, health, Social Security information, retirement savings, or other incomes).

However you can change them if you feel it is appropriate.

We recommend that you first run Application 2 with the results from Application 1.

This will be a good starting point for comparison to your customized income amounts and strategies.

Then test different strategies (alter one or more of the five elements).

Print out your results so that you compare the alternatives you have considered.

Each strategy will be rated from 1 to 10 for both income security and retirement savings balance maintenance.

The monthly income amount will not change automatically if you change the other strategy elements.

What will change is the two ratings.

The results of each alternative will be presented in graphical form.

An explanation of how to read the graph and results is provided.

Once you have decided on a strategy you should move on to Application 3.

If you are married or have a partner (click here)

YOUR INFORMATION

Please Enter Your date of birth:

The REST is designed for those age 55 or older

Social Security pay status:

Select Yes if you have already started Social Security or select No if you have not.

If you are age 70 or older this must be Yes.

Social Security payment amount:

Since your benefit has already started, enter the monthly amount you are entitled to.

If past your normal Social Security retirement date you should enter the benefit amount that would be payable if you started collecting immediately.

You can obtain this information from the SSA.

Gender:

Please select

Your health status:

There are 5 options ranging from very healthy to very unhealthy.

By selecting a healthier status, the likelihood that a monthly income goal will be achieved is reduced since it is projected that you will live longer.

Please assess your own health in very general terms by comparing your health to that of people of the same age as you.

For instance, a very fit 65-year-old (compared with other 65-year olds) with no known serious medical conditions might answer “very healthy”.

Retirement Savings:

Input the total amount of your current savings to be used to generate the monthly retirement income.

This should include IRAs, 401k balances, and other retirement savings.

However you should exclude any pensions, rental income properties or annuity contracts that provide fixed income.

They will be considered in the following questions.

Remember to exclude amounts that you need to earmark for emergencies, legacy or other dedicated needs.

Other Monthly Income Amount: (This is an optional field.)

If you complete the amount field, you will also need to indicate whether the income has already started and if not, the age it will start.

If it is temporary indicate the number of years.

If there is a guaranteed cost of living increase, you can include that also.

You will be able to include up to 4 optional income amounts.

Income Already Started?

Yes No

from age

If No, Please input the age it will start.

Maximum years to be paid:

for years

If the income is temporary, indicate the number of years.

Otherwise leave as zero.

Cost of Living increase percentage:

If there is a guaranteed cost of living increase, include that here.

2nd Monthly Income Amount: (This is an optional field.)

If you complete the amount field, you will also need to indicate whether the income has already started and if not, the age it will start.

If it is temporary indicate the number of years.

If there is a guaranteed cost of living increase, you can include that also.

You will be able to include up to 4 optional income amounts.

Income Already Started?

Yes No

from age

If No, Please input the age it will start.

Maximum years to be paid:

for years

If the income is temporary, indicate the number of years.

Otherwise leave as zero.

Cost of Living increase percentage:

If there is a guaranteed cost of living increase, include that here.

3rd Monthly Income Amount: (This is an optional field.)

If you complete the amount field, you will also need to indicate whether the income has already started and if not, the age it will start.

If it is temporary indicate the number of years.

If there is a guaranteed cost of living increase, you can include that also.

You will be able to include up to 4 optional income amounts.

Income Already Started?

Yes No

from age

If No, Please input the age it will start.

Maximum years to be paid:

for years

If the income is temporary, indicate the number of years.

Otherwise leave as zero.

Cost of Living increase percentage:

If there is a guaranteed cost of living increase, include that here.

4th Monthly Income Amount: (This is an optional field.)

If you complete the amount field, you will also need to indicate whether the income has already started and if not, the age it will start.

If it is temporary indicate the number of years.

If there is a guaranteed cost of living increase, you can include that also.

You will be able to include up to 4 optional income amounts.

Income Already Started?

Yes No

from age

If No, Please input the age it will start.

Maximum years to be paid:

for years

If the income is temporary, indicate the number of years.

Otherwise leave as zero.

Cost of Living increase percentage:

If there is a guaranteed cost of living increase, include that here.

YOUR STRATEGY ELEMENTS

These have been prepopulated with the Strategy Elements suggested by Application 1.

Initially you should run Application 2 with those results as a starting point.

Then return to this screen and modify one or more of the elements to analyze alternative strategies.

1. Your monthly income goal:

2. Monthly income annual increase percent:

Annual Increase Percent Information (click here)

3. Desired amount of retirement savings to be used to purchase a fixed income annuity:

The maximum should be limited to 90% of your total retirement savings.

4. Percentage invested in stock funds:

Can be 0% to 100%.

Remainder will be invested in the bond fund.

5. Desired Social Security Commencement age:

age

Do not complete if already in pay status.

Minimum age is 62 and maximum age is 70.

RESULTS

Please be patient, it may take 30 seconds to process your results.

Monthly Income is with an annual increase percent of .

The following graph can help you better appreciate at each future age the expected income level and the expected remaining retirement savings.

Make sure you read the information on Help Understanding the Results by clicking the button above

Income

Remaining Retirement Savings

The Income Score is:

The Remaining Retirement Savings Score is:

The results are based on the following information:

Date of Birth:

Gender:

Social Security Payment Status:

Social Security Amount:

Health Status:

Retirement Savings:

Other income Information:

Annuity Purchase Amount:

Social Security Commencement Age:

Stock Allocation percentage:

Bond allocation percentage:

Average Rate of Return:

Date of Birth:

Gender:

Social Security Payment Status:

Social Security Amount:

Health Status:

Retirement Savings:

Annuity Purchase Amount:

Social Security Commencement Age:

Stock Allocation percentage:

Bond allocation percentage:

Average Rate of Return:

Other income Information:

IF SATISFIED WITH YOUR INCOME GOAL AND STRATEGY, YOU SHOULD MOVE ON TO APPLICATION 3. OTHERWISE RERUN WITH CHANGES.

INTRODUCTION

Assuming you have now decided on a strategy,

you may have a report generated that illustrates expected annual cash flow.

We have prepopulated the expected investment rate of return based on the strategy used in Application 2.

The report is generated to age 100.

Warning:

This application 3 assumes that the expected investment rate of return will be constant from year to year.

This seldom if ever is the case.

For example, you may earn on average a 5% return over all years,

but it matters greatly what your retirement savings balance is in those years when you earn more or less than the 5% return.

This causes issues when the actual returns are lower in the earlier years when your retirement account investment balance is generally at higher levels.

Application 2 considers those possibilities.

YOUR INFORMATION

The following information is prepopulated from Application 2.

There is generally no reason to make any changes other than possibly the Expected Investment Rate of Return at the bottom.

Your date of birth:

Retirement Savings:

Gender:

Social Security

Pay Status:

Monthly Payment:

Commencement:

age

Other Income #1

Amount:

Started?

Yes No

from age

Maximum payments:

for years

Cost of Living:

Other Income #2

Amount:

Started?

Yes No

from age

Maximum payments:

for years

Cost of Living:

Other Income #3

Amount:

Started?

Yes No

from age

Maximum payments:

for years

Cost of Living:

Other Income #4

Amount:

Started?

Yes No

from age

Maximum payments:

for years

Cost of Living:

Monthly Income:

Annual Increase Percent:

Fixed Income Annuity:

Expected Investment Rate of Return:

RESULTS

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Education

Implementation

Implementation
Introduction
Monthly
Income
Guaranteed Fixed
Income Annuity
Investment
Decisions
Contact
Us

IMPLEMENTATION INTRODUCTION

The REST is an educational and strategy modeling tool.

It is not intended to provide investment or financial planning advice.

There are alternative approaches to modeling or generating retirement income not considered by the REST.

The REST analytics is designed for an individual only,

so if you are married, have a partner or other dependent beneficiary

you should consider some of the suggestions previously addressed before implementing your retirement plan.

So now what?

Of course, that is up to you.

But here are some ideas.

Implement a strategy you have modeled using the REST. The topics listed above will provide some guidance.

Keep working. This might not be possible for all individuals. However, if using the REST indicates that you might not be able to generate enough retirement income to meet your needs or desires, you might want to consider putting in some more time on the job.

Use the knowledge that you have acquired and find a financial adviser to help you put your retirement plan in place.

Keep learning about retirement decision making and options. But be careful that the sources you rely on are unbiased and not advocating for actions that might not be in your best interest.

MONTHLY INCOME

Most retirees prefer to receive their monthly income directly through their bank account.

Social Security:

Monthly direct deposit from Social Security is the standard approach.

One can have benefits started by applying through his or her local Social Security office. You will need to provide banking and tax withholding information.

Fixed Income Annuity:

Fixed income annuities are almost always paid monthly and can be sent directly to your bank account.

You will have to provide the insurance company or insurance broker both banking and tax withholding information.

Employer pension plans:

If you elect an annuity option the plan can accommodate a direct deposit option to your bank account.

Once again banking and tax withholding information will be required.

401K Plans:

Some but not all 401k Plans can accommodate a monthly payout request either to you or your bank.

If the plan does, one will need to supply the amount of the monthly payment (coming from each investment), banking information and tax withholding instructions.

If the 401k plan does not offer this option, you might consider rolling your 401k account into an Individual Retirement Account (IRA).

IRAs:

Before selecting an IRA custodian make sure that the fees are reasonable and that appropriate investment choices are available.

Information will need to be supplied regarding your bank, tax withholding, amount of withdrawals and from which investment.

Other Considerations:

Payments from an IRA or employer retirement plans are generally fully taxable.

Consider increasing your total income each year based on your modeling.

If you delay Social Security, the amount you will need to withdraw from your investment account will be higher in the earlier years

If you have temporary income, the amount you will need to withdraw from your investment account will be lower in earlier years

GUARANTEED FIXED INCOME ANNUITY

These products provide a guaranteed lifetime income that eliminates investment and longevity risk on the savings used to purchase the annuity.

However, they are generally permanent once purchased and don’t protect against inflation risk.

Buying:

They can be purchased directly from insurance companies (through their Agents) or through an insurance broker who can obtain proposals from multiple insurance companies.

Online annuity buying platforms are also available.

Examples include IncomeSolutions.com, and ImmediateAnnuities.com, in addition to others.

The annuities may be purchased through tax qualified accounts like IRAs or some 401k Plans, or after-tax investment accounts.

The tax treatment on the payouts will differ based on where the funds come from to make the purchase.

Pricing:

It is a good idea to get pricing from different providers as they will vary from one insurer to another.

Make sure you are comparing identical products.

Price is an important consideration but not the only factor.

The strength of the insurer should also be considered.

Options:

Options exist where benefits may be payable to a dependent upon your death.

These options however will provide smaller monthly benefits for a fixed amount of the premium charged.

However, for some retirees and their dependents it may be worth the reduction in monthly benefits.

401k Plan issues:

If your 401k plan does not allow fixed income annuity purchases, you may still wish to make the purchase using funds from a 401k plan.

To do so, first identify the IRA custodian where the annuity will be purchased through (not all IRA custodians will hold fixed income annuities).

You should initiate a direct rollover from the 401K Plan to that IRA with the amount of money planned to make the purchase.

Hopefully the 401K plan will allow for a partial rollover.

The annuity purchase then occurs within the IRA.

There might be situations where one might be able to get a better fixed income annuity price through an IRA as opposed to a 401k plan.

This is more likely for males.

INVESTMENT DECISIONS

Selecting specific investments is a key part of your retirement income planning.

Many 401k plans offer suitable options.

Cost:

There are many investments that could be used in a retirement income strategy.

However, a simple effective approach is to use passive low-cost index mutual funds or exchange traded funds (ETFs).

Managed funds tend to have higher costs with no assurance of better returns.

Asset Classes:

Often a large cap stock fund and a total return bond fund will be sufficient.

Other investments could be considered that will provide more diversification but might have much higher expenses.

It is difficult to guarantee that the addition of more investment classes will assure higher returns.

Rebalance:

Assets should be rebalanced to the desired asset allocation at least annually since with time investments will no longer be in the desired balance.

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Introduction

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