Data Entry: Retirement Spending

Model Dynamic Retirement Spending with Ease

RightCapital enables you to capture every element of a client's financial landscape, including multiple retirement spending models.

Retirement spending can be customized based on client behavior or market performance. There are five default spending strategies found in the Advisor Portal > Models > Retirement Spending tab. Advisors can modify the parameters around existing strategies, add new spending strategies, or remove them altogether. All strategies included in the Models > Retirement Spending tab will be available in every financial plan's Retirement Expense Goal & Retirement > Analysis > Action Items.

Retirement Spending Strategies

You will have access to the following spending strategies within RightCapital:

  • Inflation adjusted expense strategy
  • Retirement spending smile strategy
  • Retirement spending stages strategy
  • Guardrail spending strategy
  • Floor & ceiling strategies

The Retirement spending strategies will only impact expense values input within the Profile > Retirement Expense card, also found in step six of the initial data entry.

Inflation Adjusted

The default spending strategy is “Inflation Adjusted”, which is simply increasing expenses each year by the global inflation assumption.

Retirement Spending Smile

In the retirement spending smile strategy, the inflation rate used for retirement expenses will be reduced by the specified percentage causing a slow reduction in spending over time. Increasing health care costs over time can offset the decrease causing the ‘smile’ effect.

Retirement Spending Stages

The retirement spending stages strategy creates three stages of retirement spending where expenses are reduced downward at each stage. The first stage will start at the client’s retirement and the last stage will end at end of plan. Advisors can customize the starting age of the second and third stages as well as the expense adjustment percentages for each.

Guardrails

The guardrails strategy has two components to adjust retirement spending for a specified timeframe. The first component, if enabled, does not inflate retirement expenses if the previous year’s return is negative or zero. The second component puts ‘guardrails’ around the overall withdrawal rate up to a specified age. If the overall withdrawal rate exceeds the original withdrawal rate by the specified percentage, RightCapital will automatically reduce retirement expenses as indicated. If the overall withdrawal rate is lower than the original withdrawal rate by the specified percentage, RightCapital will increase retirement expenses.

Floor and Ceiling

This strategy adjusts the retirement expenses each year so that they represent a constant percentage of the client’s invested assets, subject to a floor and ceiling based on the original retirement expense number.

Add New Spending Strategy

You have the option to create unique spending strategies using the Models > Retirement Spending > + Add spending strategy button.

The new strategy will be based on one of the existing strategy types but the name and parameters can be customized and saved for use in any financial plan.

For additional assistance using retirement spending strategies in RighCapital please contact RightCapital Support.