Building a successful retirement proposal for a client is wonderful, but what happens if uncontrollable factors experience more dire realities than the projection currently includes? RightCapital has built the Stress Test tool to answer this exact question.
To choose which stress test items you wish to display on the screen, click the 'Edit' button to check or uncheck various stresses:
To choose which stress test items you wish to display on the screen, click the 'Edit' button to check or uncheck various stresses:
Stress Test Action Items:
Equity markets drop immediately by:
Assumes an immediate drop in the equity portion of the client's investments by the percentage indicated. Subsequently, investments are assumed to grow as they would have in the Baseline plan, one year after the market drop.
Equity markets drop at retirement by:
Assumes a drop in the equity portion of the client's investments, at retirement, by the percentage indicated. Subsequently, investments are assumed to grow as they would have in the Baseline plan, one year after the market drop.
Asset return will be lower by:
Reduces variable investment returns by the percentage indicated across the board.
Inflation will be higher by:
Increases all inflation rates by the percentage indicated. For example, if general inflation is 2.5% and you indicate that inflation will be 1% higher, we will use 3.5% as the general inflation rate.
Tax expense will be higher by:
Assumes an increase in the total taxes paid by the percentage indicated. For example, if the client is paying $20,000/yr in taxes, a 20% higher tax stress will increase the tax expense to $24,000.
Social Security will be reduced by:
Assumes a reduction in total Social Security benefits paid by the percentage indicated. For example, if the client is receiving $50,000/yr in Social Security, a 40% reduction in Social Security will reduce the benefits to $30,000/yr.
Health care cost will be higher by:
Assumes an increase in the total health care costs by the percentage indicated. This applies to costs specified in the Annual Retirement Health Cost and Annual Retirement LTC Cost cards.
You (and the co-client) will live:
Extends both the client and co-client's planning horizon by the number of years specified.
Combined:
The combined stress test reflects the cumulative impact of all of the other stress tests displayed in the graph. This allows you to select specific stressors and indicate their combined impact on the probability of success.
