A new tool will help individuals in retirement plans project their own retirement readiness and model different steps to improve it.
John Hancock Retirement says the retirement planner goes beyond providing projections based on a flat income replacement ratio. Instead it shows retirement readiness based on an individual’s personal projected spending in retirement “using key demographic and behavioral data points that consider the organic fluctuations that occur during retirement.”
Helping participants better understand their expenses in retirement allows them to implement the most appropriate withdrawal strategy based on individual income sources and needs such as health, lifestyle and other assets.
“Despite recent market swings, we have found that clear investment goals and a proactive plan can help participants put short-term market fluctuations into context and continue to work toward the retirement they want,” Patrick Murphy, CEO of John Hancock Retirement, said in a statement. “The retirement planner addresses top concerns and satisfies the needs of participants as they plan and prepare for retirement, giving them a realistic and tangible retirement goal.”
Using each participant’s current retirement funds and savings strategy, it provides insight into longevity risk, future spending patterns and predictive analytics to generate a personalized projection of how income in retirement compares to the anticipated costs over the course of the participant’s retirement years.
Personalized plan
Participants receive a personalized action plan with steps that will help them get on track if they’re behind or improve their general financial health if they’re retirement ready.
Participants can also adjust and model several variables in the retirement planner, such as when and where they plan to retire, health status, lifestyle, and outside savings, to see how different inputs can impact their specific retirement outcomes.
According to John Hancock’s most recent Financial Stress Survey, 80 percent of participants have given some consideration to potential wealth and health issues in retirement.
When addressing these considerations, the retirement planner factors personal health data into both the analysis tool and actual needs projection. According to the company, this helps provide a more accurate scenario for individual participants, rather than relying on base assumptions using the same income replacement ratio for everyone.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
