What is Retirement Insight Modelling?
Retirement Insight is a web application containing cash flow forecasting software. Straightforward to use and similarly simply priced it offers a powerful analysis of your financial future with relatively little effort or cost on your part.
Our web app is designed for the major internet browsers and to be run on tablets. It should work well on mobiles but hasn’t been designed with these specifically in mind.
What is cash flow forecasting?
Cash flow forecasting takes your current savings, income and expenditure and, with assumptions about inflation and investment returns, forecasts these forward from your current age to the age of 99. It shows at any point along the journey the amount of savings you have and whether there are periods where you are going to fall short.
What do I need to create a cash flow forecast?
You probably have everything you need to hand relatively easily:
- Your name, age and planned retirement date
- Your income details – how much, when it will start and stop, future income like a state pension
- Your expenditure details
- Your savings values – cash in the bank, pensions, investments etc.
- An assumption around growth rates for your pensions and investments
What does the result look like?
The results will be a PDF report with an overview page showing your basic details with their starting savings total and the total at age 99, along with a graph demonstrating the whole time period. This graph has a couple of added features. There is a bar chart showing the total savings at the end of each year and then there are three lines on top of it, these are:
- A line showing what would happen if you got an extra 10% investment return every year. So if the assumption was a 4% return each year, this shows a 4.4% return each year.
- Another line shows what would happen if you got a 10% smaller return each year – so 3.6% rather than 4%.
- The final line examines your tolerance for loss. So if your have £10,000 in savings and your tolerance for loss is 25% of this then this line starts out at £7,500 and examines what happens from there. A crash test if you will.
The next page will list the data for the bar chart – i.e. it will show, for every year, the starting value, the total income, total expenditure and the final value for that year.
The final page lists the income and expenditure being used in the graph.
Why do you include the +/- 10% investment return forecasts?
Investments don’t tend to grow smoothly at a specific rate so it’s good to know what might happen if returns were different by 10% a year. Overall this gives you a range to examine and to help you understand what different investment returns could mean for you.
Why do you include the tolerance for loss forecast?
Analysing tolerance for loss – i.e. how much volatility you can tolerate – is a key part of the planning process. It is tightly linked to your capacity for loss, i.e. how much you can actually afford to lose, so it is important to check if your tolerance for loss is actually affordable. By assuming they lose it immediately it completely eradicates any compounding effects that might be enjoyed on that money if your big loss came 10 years down the line instead.
Right, I’ve made the report. What do I do now?
Review it! Think about what it means for you, does it mean you’re not on track? What if you started saving extra now, will that bring you back on track for your long term plans? Does your plan show that you have too much money in the future? Could you retire earlier?
That’s what this is all about, creating those options for you. The earlier you know the better you can prepare. But things change, you might change jobs, get married, come into an inheritance etc. So re-run the forecast regularly to make sure it is accurate for your current position.
Add in your dreams, why do it otherwise? Include the big cruise you’ve always wanted to do for your 60th birthday, or the new car you’ve been looking at!
How can I get in touch if I have a problem?
There are several options:
- Direct message us on Twitter
- Contact us on FaceBook
- Contact Us On Instagram
- Contact Us On LinkedIn
- Use the contact form at the bottom of this page to send us an e-mail – click here.
We’ll get back in touch ASAP.