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Vision Otar2


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Vision Otar2

  1. 1. A Fresh Look at Your Retirement Plan by Gregor McDonald, CFP ® Vision Financial Planning
  2. 2. A Fresh Look at Your Retirement Plan <ul><li>Recent market events compel us to review your retirement plan in a more realistic way </li></ul><ul><li>After every market correction, we see that plans that were prepared using conventional retirement calculators, become irrelevant </li></ul><ul><li>Retirement dreams seem to be pushed further and further away, especially after each market correction </li></ul>Copyright ©2009 Inc.
  3. 3. A Fresh Look at Your Retirement Plan <ul><li>Before your retirement dreams turn into retirement nightmares, let’s review your retirement plan </li></ul><ul><li>This time, I propose using a new tool that is significantly more innovative than other retirement calculators that we have been using </li></ul><ul><li>This new retirement calculator uses an entirely different philosophy. It may change the way we look at retirement planning </li></ul>Copyright ©2009 Inc.
  4. 4. A Fresh Look at Your Retirement Plan <ul><li>All conventional retirement calculators make a FORECAST using certain assumptions: </li></ul><ul><li>average assumed portfolio growth rate </li></ul><ul><li>average assumed inflation </li></ul>Copyright ©2009 Inc.
  5. 5. A Fresh Look at Your Retirement Plan <ul><li>The following example shows the reality for three generation of retirees: </li></ul><ul><li>The grandfather retires at the beginning of 1929 </li></ul><ul><li>His son retires at the beginning of 1966 </li></ul><ul><li>His grandson retires at the beginning of 2000 </li></ul>Copyright ©2009 Inc.
  6. 6. A Fresh Look at Your Retirement Plan <ul><li>Each one starts with $1 million of retirement savings </li></ul><ul><li>Each one needs $60,000 to take out annually </li></ul><ul><li>Each one start his retirement at age 65 </li></ul><ul><li>We assume an annual portfolio growth rate of 8% </li></ul><ul><li>We assume an inflation rate of 3% per year </li></ul><ul><li>Let’s see what happens to their retirement dreams: </li></ul>Copyright ©2009 Inc.
  7. 7. Standard Retirement Plan GREAT! I will have sufficient money for retirement Copyright ©2009 Inc.
  8. 8. A Fresh Look at Your Retirement Plan <ul><li>The forecast looks fantastic! </li></ul><ul><li>Let’s do a Reality Check </li></ul>Copyright ©2009 Inc.
  9. 9.   1929 Wow! Nice Bull Market! Time to Retire! Grandfather retires in 1929 Copyright ©2009 Inc.
  10. 10. 1/1/1938 1/1/1929 Grandfather is broke 9 years later! Copyright ©2009 Inc.
  11. 11.   Wow! Nice Bull Market! Time to Retire! 1966 His son retires in 1966 Copyright ©2009 Inc.
  12. 12. 1/1/1966 1/1/1979 The son is broke 13 years later! Copyright ©2009 Inc.
  13. 13.   Wow! Nice Bull Market! Time to Retire? 1/1/2000 The grandson retires in year 2000 Copyright ©2009 Inc.
  14. 14. The grandson will be likely broke only 12 years later! Age: 65 Age: 77 Copyright ©2009 Inc.
  15. 15. A Fresh Look at Your Retirement Plan <ul><li>In the real world, it does not matter how accurate your assumptions are for your forecast. </li></ul><ul><li>What matters is the SEQUENCE OF RETURNS that you experience during the early years of your retirement. </li></ul>Copyright ©2009 Inc.
  16. 16. Portfolio Life Depends on How Lucky You Are Sometimes, you might catch a bullish trend: You can have income for 40+ years More often than not, you don’t catch a bullish trend: Portfolio lasts about 15 years Copyright ©2009 Inc.
  17. 17. A Fresh Look at Your Retirement Plan <ul><li>The retirement planning tool that I use, does not forecast anything. </li></ul><ul><li>It does not require any assumptions or averages </li></ul><ul><li>This new tool only uses the actual market history. </li></ul><ul><li>This method of planning is called AFTCASTING </li></ul><ul><li>Aftcasting shows you all possible outcomes based on actual market history since 1900 </li></ul>Copyright ©2009 Inc.
  18. 18. Your Retirement Plan based on Actual Market History Copyright ©2009 Inc.
  19. 19. A Fresh Look at Your Retirement Plan <ul><li>Now, you can decide in a much more informed way: </li></ul><ul><li>When can you retire? </li></ul><ul><li>How much do you need to save until retirement? </li></ul><ul><li>How much you can spend after retirement? </li></ul><ul><li>What strategies can you to use for lifelong income? </li></ul><ul><li>How can you export the longevity, market and inflation risks to others? </li></ul>Copyright ©2009 Inc.
  20. 20. A Fresh Look at Your Retirement Plan <ul><li>OUR GOAL: </li></ul><ul><li>To determine your essential and discretionary expenses during your retirement </li></ul><ul><li>To figure out when you can retire </li></ul><ul><li>To create a personal pension for your essential expenses </li></ul><ul><li>To minimize the luck factor for your retirement age </li></ul><ul><li>To optimize your current portfolio to maximize return and minimize risk </li></ul>Copyright ©2009 Inc.
  21. 21. A Fresh Look at Your Retirement Plan <ul><li>Let’s try this new tool and see how we can plan your retirement more realistically. </li></ul><ul><li>Do you want to go ahead? </li></ul>Copyright ©2009 Inc.
  22. 22. Disclaimer <ul><li>Otar Retirement Calculator (ORC), illustrates how a mix of asset classes (stocks, bonds, cash or inflation indexed bonds), or income classes (investment portfolio, immediate life annuity, variable annuity with or without guaranteed income), would have fared under historical market conditions, given your stated financial goals and your cash flow. It does not provide a prediction of your ability to meet your goals; rather, it merely reports the hypothetical outcomes that would have occurred in the past. </li></ul><ul><li>ORC should not be used as the primary basis for any investment or tax-planning decisions. Results will vary in the future. ORC is not intended to predict the future value of actual investments or actual holdings in your portfolio. It is also not intended to predict the current and future value of actual lifetime income. </li></ul>Copyright ©2009 Inc.