Retirement Profile overview

Methodology & Assumptions

Retirement Profile (RP) is an educational tool designed to help users (within 5 years of retirement) envision their retirement lifestyle, directionally assess their income readiness and educate themselves on key topics to help prepare for retirement. The tool is intended to be a starting point to help users think through the emotional and financial aspects of retirement.

IMPORTANT: The projections or other information generated by Retirement Profile tool regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results.

The content on this website including the Retirement Profile tool is for educational purposes only. Results derived from this tool are based on your inputs and certain hypothetical assumptions and must not be regarded as a promise, projection or estimate of your actual situation at retirement. Differences between assumptions made by the tool and your actual situation may lead to different results. Your results may vary with each use and over time. The information contained herein does not constitute investment advice or an investment recommendation under the Employee Retirement Income Security Act of 1974 (ERISA), as amended, or Section 4975 of the Internal Revenue Code. You should not rely on this tool/guidance material as a primary basis for your retirement investment decisions.

Calculations, Assumptions & Limitations

Estimated Monthly Income is an after-tax estimate of your monthly income in retirement. This estimate uses the total amount of retirement savings and other available income sources (including Social Security and Pensions) as provided by you in the Finance Section of the tool. It assumes that your savings, available to fund your retirement goals, are invested in a 70% Bonds, 30% Stocks portfolio. The tool then calculates your maximum monthly income (at 90% confidence level) using Monte Carlo Simulation approach that takes into account 500 randomly generated potential market scenarios.

Indexes Used as Proxies for 70% Bonds and 30% Stocks Portfolio
(You cannot invest directly in an index)

Benchmark Percentage of Allocation
Russell 1000 Growth 5%
Russell 1000 Value 8%
Russell Mid Cap Growth 3%
Russell Mid Cap Value 5%
Barclays US Corporate High Yield 6%
Barclays Gbl Infl Linked US TIPS 7%
Barclays US Govt/Credit Long 14%
Barclays US Govt/Credit 1-3 Yr 38%
BofAML US Treasury Bill 3 Mon 5%

Estimated Monthly Expenses is an after-tax estimate of your monthly expenses in retirement using the inputs provided by you in the Finance Section of this tool.

Financial Snapshot is determined by subtracting Estimated Monthly Expenses from Estimated Monthly Income to calculate your projected monthly income surplus or deficit. This calculation assumes that you are retiring immediately and as such does not take into account any future savings or contributions during pre-retirement period when calculating your financial snapshot.

Life expectancy is assumed to be 92 years for males and 95 for females. Retirement Profile uses life expectancy of 92 years for males and 95 years for females based on approximately 85th percentile observation for a 65 year old male and female as per the 2009 Social Security Period Life Table.

Social Security Amount, if not provided by you in the Finance Section of this tool, is estimated by the tool based on an assumption that you and your spouse (if applicable) are eligible for Social Security and will file and claim as soon as possible. To calculate this amount we use your current age and the current or most recent monthly salary that you specified. For a married couple, the tool does not take into consideration any spousal benefit you or your spouse may be eligible to receive; only your own benefit is considered. For a single case, deceased or divorced spousal benefits are not considered; only your own benefit is considered. Please note that this estimate is for information and education purposes only. It does not address all potential claiming strategies. There may be other claiming strategies and factors which could lead to a different benefit amount for your specific situation. You are solely responsible for selecting and implementing a Social Security claiming strategy.

Pension and guaranteed income payouts, if provided by you are included in your Estimated Monthly Income and assumes joint lifetime income with 100% survivor benefit with no Cost of Living Adjustment (COLA).

Average monthly cash flows from other sources like rents, royalties etc., if provided by you, are included in your Estimated Monthly Income and are assumed to last for the first 10 years of retirement with no COLA.

Start date of the analysis is the upcoming January for the first person due to retire.Taxes are based on Federal taxes only and it is assumed that your retirement savings and income distributions are split equally between qualified and non-qualified accounts.

Taxes estimated using these simplifying assumptions are added to the living expenses to calculate your pre-tax retirement expenses. Please note that the use of tool and these estimates do not in any way constitute tax advice. Your actual taxes may vary based on your specific situation. Please consult your tax advisor for detailed tax estimation.