EvolveMyRetirement® helps you build a personal financial plan, designed to assist your cash flow management. Once you’ve completed the process of inputting the income, outgoings, assets, and liabilities of each plan member, EvolveMyRetirement® uses a combination of a Genetic Algorithm and Monte Carlo Simulation to deliver a tailored personal financial plan.
The strategy will break down the finances under your control. The key element of your strategy is your discretionary spending; other things being equal, maximising it is clearly desirable. Other elements of your strategy are there to help you achieve your spending and legacy goals. For example, these include rules for funding your pension plan before retirement, and rules for drawing down your pension fund after retirement. You can manually change your strategy based on your current needs to refine and build your financial plan further.
With your strategy tweaked and finalised, it’s time to view your results. Remember that you can always go back and refine your personal financial plan at any time.
The EvolveMyRetirement® results dashboard will show you the combined net worth, annual income and annual spending of the members on the financial plan. As well as showing how much discretionary spending you can afford, the results will show how likely you are to run out of money in your lifetime, and the chances of when this might happen.
The dashboard indicates possible timelines for insolvency, but it distinguishes between running out of cash and running out of all saleable assets. In practice, avoiding ruin might mean a radical lifestyle change like selling your home, and EvolveMyRetirement® takes this distinction into account.
The results will also show an estimated range of figures for how much inheritance you may be able to leave behind after you’re gone.
The dashboard lets you test the results of your financial plan in different scenarios. It gives you the choice to run an average scenario (one that makes balanced estimates about variables like life expectancy and investment returns) or a random scenario.
A random scenario will look different each time, just as each scenario in a Monte Carlo Simulation is different.
All results and scenarios should be treated only as an illustration and should not be relied upon as predictions.
After you've created a strategy, whether by letting the system optimise it or by editing it manually, it's often useful to see what the effect small changes might have on the results. You could of course keep on editing the strategy and checking the results, but that's cumbersome. Instead, the results dashboard lets you run a sensitivity analysis on any chosen strategy setting, as well as on your planning assumptions and on certain other variables. The outcome of a sensitivity analysis is displayed graphically.
Within the EvolveMyRetirement® tool, there are some changes you can apply to improve your results and reduce risk.
Postponing retirement, cutting down on ‘essential’ spending and lowering your discretionary spending can all contribute to a brighter financial outlook.
You should also consider whether your aversion to risk and the importance of leaving an inheritance are recorded correctly in your plan. The built-in optimisation ranks the results of possible strategies differently based on these settings.
If your personal financial plan results are still concerning to you, we suggest consulting an independent financial advisor, and sharing your plan with them. A financial advisor can validate your plan and its assumptions, and give you in-depth advice about your personal financial strategy.
For additional help, please visit our Support section.
