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Building Your Personal Financial Plan

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Get your personal finances on the right track

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, debts and inheritances of each plan member, EvolveMyRetirement® uses a combination of Genetic Algorithms and Monte Carlo Simulation to deliver a tailored personal financial plan.

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Financial Strategy

The strategy will break down the finances under your control. The key element of your strategy is your discretionary spending for each year, since maximising it is desirable. Other elements of your strategy are there to help you achieve your goals. These include (for example) the target percentage of income to set aside for your pension fund before retirement, and the target percentage of your pension fund to draw down after retirement. You can manually change your strategy based on your current needs to refine and build your financial plan further.

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Results

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 expenses of the members on the financial plan. As well as showing how much discretionary spending you’ll be able to afford each month, 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 this doesn’t necessarily mean that all your assets will have been exhausted. It might mean a radical lifestyle change like selling your home, but it doesn’t necessarily mean that you’ll be penniless with nothing for your next of kin to inherit.

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.

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Sensitivity analysis screenshot

Sensitivity Analysis

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.

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Scenario screenshot

Scenarios

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, picked from one of thousands of scenarios from a Monte Carlo Simulation.

All results and scenarios should be treated only as an illustration and must not be relied upon as predictions.

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Worried by the results?

Within the EvolveMyRetirement® tool, there are some changes you can apply to improve your results and reduce risk.

Postponing retirement, cutting down on ‘essential’ expenses 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 behind 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 a qualified financial advisor. A financial advisor can use the findings in your EvolveMyRetirement® results to validate your assumptions and give you in-depth advice about your personal financial strategy.

For additional help, please visit our Support section.

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