229- How Secure Is Your Retirement?
I am always looking for free financial tools and calculators that make my life easier. I recently came across a great one that assesses the security of an individual’s retirement income. It helps to create awareness that action needs to be taken to improve the security of sources of lifetime income. As I have written a number of times, the key to financial security is positive after-tax cash flow for as long as you live. To create this flow you need to save enough to accumulate assets that convert into the amount of income you need.
The tool I have discovered helps you understand just how close you are to meeting your goals. The tool calculates your Retirement Income Security Evaluation (RISE) Score. The score evaluates just where you fall in terms of having steady income in retirement, much like a credit score, on a zero to 750 scale.
The tool is provided by the Alliance for Lifetime Income, a nonprofit backed by the financial services industry. It was developed by Milliman, one of the most respected providers of actuarial products and services.
Milliman states that consumers want greater surety that their saving and investing strategies are keeping them "on track" to meet their retirement goals. The Milliman Retirement Income Security Evaluation Score (RISE) is a tool that provides an easy-to-understand, quantified measure of retirement income security in minutes. RISE is also designed to help answer the simple question: How can your retirement security potentially be improved through the addition of lifetime income solutions?
Consumers can access the tool by going to the Alliance for Lifetime Income website and clicking the tools tab. The application will open, and you will be asked to input non-personal information such as your projected Social Security income, any pension income you may have, how much you have saved and your monthly living and medical expenses. The score is then calculated along with some other important information.
The Alliance provides both consumer-facing and advisor-facing versions of the tool. The professional version takes more details of an individual’s financial picture into account, such as portfolio allocations and different kinds of annuities.
Preparing for retirement, or what I call the Fulfilling Stage of your financial life, is a multi-faceted process. It requires you to plan, make a number of key money decisions and decide more than just financial matters. You should take the time to see how you are doing with this tool from the Alliance for Lifetime Income. While you are using the tool, take a look at the other materials and information offered by the Alliance to help you in your journey. Planning for when you stop working full-time is essential for everyone. Planning is the key to lifetime financial security.
Thank you for your interest in improving your financial knowledge!