Building a withdrawal or retirement strategy is fraught with risks. What if the market has a serious downturn in the early years, what if the client lives far longer than allowed for?

Timeline is an app which uses empirical asset class and longevity data in order to help advisers visualise their client’s potential retirement journey. It does this by collecting information on the client in terms of their income, assets and expenditure. In the US they have integrated ByAllAccounts to provide data aggregation services to make this far faster and easier. The user then only needs to input some basic retirement information such as the desired retirement age, income required, asset allocation, and whether a spouse should be included in order to gain a view of the client’s situation.

Based on this information the app is able to present a picture of the client’s current retirement health via four common metrics:

  • Success Rate – This runs the client’s requirements through 100 different scenarios to highlight how many times out of 100 they would be able to meet their goal
  • Legacy – Highlights whether there will be any assets left at the end of the retirement period based on the 50th percentile scenario
  • Longevity – This highlights the age at which the client is likely to run out of money based on the 10th percentile scenario
  • Lifetime Income – Shows the total income the client would receive in retirement based on the 10th percentile scenario

 Anyone that has ever run a client’s scenario through such a tool will understand that it is very rare that a positive result will come out on the first scenario run. As such advisers will need to discuss the results with their clients and look at where compromises can be made. This may mean lowering the level of income being received or retiring later, however Timeline also offers the ability to apply rules-based withdrawal strategies such as Guyton’s Guardrails, Floor and Ceiling Rule and Kitces’s Ratcheting Rule.  Apply one of these strategies to the plan can help reduce sequencing risk by setting specific rules about spending and withdrawals in the early years of the plan and therefore improve the client’s chances of achieving their retirement goals. Once all compromises have been made the system enables the user to produce a detailed report highlighting the plan, which can then be shared with the client.

 A new feature being added to the Timeline proposition is TimelineLivetrack. As the name suggests it is an extension of the system that will allow the adviser to track the progress of a client’s plan over time. Based on the four common metrics already described, firms can set thresholds so that if a client’s plan falls below the success rate or longevity thresholds, the adviser would be alerted and take action as necessary.

 Timeline is a hugely powerful calculation engine that provides advisers with a simple and fast process to build a retirement strategy for their clients. It uses some very complicated strategies however it presents the client with key metrics that will matter to them in terms of ‘how likely am I to hit my goal’, ‘will I have anything left’, ‘how long will my money last’ and ‘how much will I have’. 

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