2009 Update

The 2009 RetireWare update will be available Thursday, February 12, 2009.

In addition to including the 2009 retirement savings and income tax rates and amounts, users will be able to include in their retirement plans the following features: Tax Free Savings Account, CPP/QPP pension sharing, pension income splitting and federal income tax calculated on the changes in the 2009 Federal budget, if adopted.

You can purchase now your 2009 update and download later the service update from www.retireware.com/service.aspx or you can wait until February 12 to purchase and download the update at the same time.

Monte Carlo and calculating income tax

Question:

I am currently using Naviplan standard and considering going to the extended version.

I am looking for a way to incorporate client investments into their financial plan showing the ups and downs and how this volatility is affecting their plans. Can you plan do this or can you customize it to do this? As well, I am a little confused by the statement “simulates a tax return” described on your website.

Answer:

The Monte Carlo Edition of RetireWare does capital market simulations based on volatility of the person's investment portfolio. The outcome is a probability of success. So, while there may be significant volatility, if expected returns are achieved, it will provide comfort to the client showing the degree of certainty of their financial security.

Read the information on the following page: http://www.retireware.com/simulations.aspx

The software simulates a tax return, so each future year of the projection of assets and future income, income tax calculations are based on actual tax rules. Other products usually use a single "marginal tax rate" for simplicity. By using accurate tax calculations, the numbers are more robust and reliable.

Most advisors buy a single copy and create printed or PDF reports or summarize them within their own reports.

Please remember that you can purchase a copy and if it does not suit your needs, you can get a refund within 30 days.

Upgrading to Monte Carlo version

Question:

Can you tell me if you purchase the standard version now and later wish to purchase Monte Carlo can you do so and if so at what cost?

Answer:

You can upgrade for the difference in cost between the two versions. This is the upgrade page:

http://www.retireware.com/purchase.aspx

Monte Carlo Simulation - withdrawal amounts in retirement

Question:

I have done extensive research on the Internet regarding using Monte Carlo simulators for retirement planning. From what I have read, it is more important to withdraw a fixed percentage (i.e 4%) of your total portfolio each year rather than a dollar amount. For example a $1 million porfolio you would withdraw 4% or $40,000 per year and let the rest grow. My question is does your Monte Carlo simulation allow you to enter withdrawls amounts as a percentage of the portfolio as opposed to just a dollar amount. Some programs will event tell you how much you can withdraw at a given level of probability. In other words, you have a 95% probability of not running out of money for xxx years if you withdraw xxx amount per year. How does your program deal with these issues.

Answer:

With RetireWare, you build a plan by choosing a retirement income objective, and the income need is met using Government and company pensions, other income, and investment assets, each with their withdrawal rules and tax treatment. You run your plan on a deterministic basis (that is, assuming no variations in expected rates of return). Withdrawals from investment assets depend on what you need to close the gap between the retirement income objective and income payable each particular year. This amount varies as some are indexed, others come in payment only from a certain age and some cease being paid at a particular point in the future (for example, if you work on a part-time basis for a few years after retirement).

This retirement plan that you create with all this level of detail is also "stressed-test" using a Monte Carlo simulation, where the expected rate of return for each asset class varies randomly in accordance with its volatility.

Monte Carlo is integrated with the actual plan and is not merely a flat withdrawal percentage each year. We have seen articles showing a safe withdrawal rate using Monte Carlo simulation as an analysis tool, but they usually used a simplified model. Our model takes into account various types of income and various types of investment accounts (non-registered, RRSP, locked-in assets, etc.).

So you can try different retirement income objectives and see the probability of success for each. Then you can decide the income level you feel most comfortable with.

Investment property

Question:

On taxes; how does the software handle capital gains on other property. I have added a property, that is not my principle residence, but I do not see any related taxes n the year of disposition.

Answer:

1. Select in 'Other Assets' the percentage that will be used as a source of retirement income
2. In 'Sources of Income', select 'Other Property' as a source of retirement income.

If you use 100%, the tax should show in the year of disposition. If you select less than 100%, a proportionate tax is allocated to non-registered investments and sown in 'Accumulations', and the remainder is accounted for in the last column called 'Other Assets'.

CPP pension

Question:

I am having difficulty getting RetireWare to show my expected CPP pension income. I am currently semi-retired, age 56. I have no full-time employment earnings and have checked that box in RetireWare's Financial Information - Earnings section. Nor am I currently in receipt of any CPP pension, so I can't enter any in RetireWare's Government Pension section. Is there any other place I should enter my expected CPP income so that RetireWare will recognize it?

Answer:

If you are semi-retired, select 'Already Retired' in Financial Information as you did, but enter an amount of earnings. This amount will be used to estimate the CPP. If you are working part-time, you can put an amount in 'Sources of Income'.

Software installed on two computers

Question:

If I purchase retireware can I download to both my desktop and laptop?

Answer:

You can have installed on your desktop and laptop as long as no two people are using it concurrently.

Download and run the installation on each computer. This is the download page:

http://www.retireware.com/downloads.aspx