In an article earlier this year, we asked “Will More 401ks Finally Provide Guaranteed Lifetime Income?”
It’s a great idea, and something research has proven 401k savers want.
One study by Transamerica found the majority of Baby Boomer and Gen X participants’ (55 and 57 percent, respectively) top retirement-related fear is running out of money. And Cerulli found 44.3 percent of respondents to their survey said that converting assets into a lifetime income stream was the most important topic they considered when planning for retirement.
Personal Capital paid attention and is out with a new product to address those issues—and then some.
The digital wealth management firm has added a feature to its Retirement Planner (Monte Carlo forecasting tool) called Retirement Paycheck. Intended to help clients create a personalized, tax-efficient withdrawal strategy for retirement, Retirement Paycheck provides guidance in a simple, clear, year-by-year, interactive way.
“How you withdraw money in retirement is just as important as how much you save,” Amin Dabit, Personal Capital’s director of advisory services, said in a statement. “There is a lot of complexity about how retirees should pay themselves from taxable, tax-deferred and tax-free accounts. Retirement Paycheck helps provide clients with the clarity needed to withdraw confidently.”
With Retirement Paycheck, Personal Capital clients can:
- See taxable, tax-deferred and tax-free accounts and get advice about which to withdraw from, in what amounts, for each year of retirement.
- Potentially increase their chances of having enough money throughout retirement.
- See an indicator to reach out to their advisor if a Roth Conversion or Tax Gain Harvesting strategy is appropriate for the client’s situation to save money on taxes.
- Avoid paying unnecessary penalties by planning for Required Minimum Distributions.
- Update the Retirement Planner in real-time to integrate income, spending and giving goals to ensure the most accurate withdrawal amount recommendations and adjust instantly alongside clients’ changing needs.
“For most of our lives, we have a paycheck and we take it for granted. Once we retire, we have to create and secure a paycheck for ourselves out of our own savings. This is arguably the most complex financial decision we will ever make, and the stakes are high: in retirement you get one chance to do it right, the runway is short,” added Shlomo Benartzi, Ph.D., Professor of Behavioral Decision Making at UCLA and member of Personal Capital’s Board of Academic Advisors. “Tools that help retirees create a paycheck, and personalize it to reflect their specific financial circumstances, are critical for retirement success.”
Jessa Claeys is a writer, editor and graphic designer.
