Today’s pension pot for tomorrow’s retirement: will it be enough?
Our new Cashflow Forecasting Tool is a great way to initiate conversations. By mapping out your client’s investment journey, it is designed to help bring home the message that holding cash may not be their best option, particularly in the current market environment.
Only 24% of baby boomers are confident they’ll have enough money to last throughout retirement - the lowest since the Insured Retirement Institute began conducting its annual poll in 2011. 1
A rather morbid and unnerving thought to start a blog with but unfortunately, that's the reality.
Most developed markets have an ageing population who are healthier and living longer. Combine this with the current low yield investment environment and it’s easy to see why people are pessimistic about what type of life they will be able to lead in retirement.
We’ve designed a new tool that you can use with your clients to help map out their financial journey towards retirement: Russell Investments' Cash Flow Forecasting Tool.
Realistic goals are key
Against today’s market backdrop, it’s important to have control over how one’s pension pot is put to work, and how much is withdrawn. Managing these factors can help people to live as comfortably as possible, for as long as possible. It is therefore imperative to have defined goals and steps in place for how one will manage their money in retirement.
Often, what people think their retirement funds are capable of achieving are not realistic.
Putting a plan into place
Russell Investments’ new Cashflow Forecasting Tool (CFT) provides an uncomplicated way to portray your client’s financial situation. It opens the door for those difficult conversations to ensure an achievable plan is in place. Both the input and output features have been designed to be as simple and user-friendly as possible. Clients can clearly see the long-term benefits of holding a diversified portfolio, rather than just holding cash.
The technology built into the tool is flexible and will tailor the model for the specific age, sex and risk appetite of the client. There is additional functionality that maps lump sum withdrawals and inflows. This is especially useful if a client knows of upcoming events which may affect their wealth i.e. funding their children’s wedding from a lump sum withdrawal, or making an additional investment following a property sale.
The technology built into the tool is flexible and will tailor the model for the specific age, sex and risk appetite of the client
The model accounts for inflation and will automatically incorporate the need to increase withdrawals over time, as inflation reduces the purchasing power of money. There is the option to illustrate other cash reserves, to help demonstrate the benefits of being fully invested over the long-term.
Bring home the message
We recognise that planning for retirement is not a black and white exercise. Our cashflow forecasting tool is a great way to initiate conversations with clients and bring home the message that holding cash may not be the best option, particularly in the current market environment.
View Russell Investments full suite of online tools designed to help you understand your clients' aims; propose investments, monitor performance and review portfolios against their objectives.
The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested.
1 Boomer Expectations for Retirement Survey, 2016