Tools to test whether retirement plans can survive past crises


Income Lab, a retirement income management software company, has released a tool to help advisers explain to clients the resilience of their retirement plans to the worst financial crisis in history.

According to Justin Fitzpatrick, CIO based in Golden, Colorado, retirement stress tests are used to determine how the crisis will affect a person’s day-to-day life and how they can help ensure the longevity of the retirement plan. It is said that it is showing customers whether they have to make such spending adjustments.income lab

The company is targeting customers nearing retirement or nearing retirement who are worried about the sustainability of their retirement plans, he said.

“What we’re trying to do here is help our advisors feel confident in their financial plans, which is not what stress testing usually does,” Fitzpatrick said. “They usually scare people.”

Advisors can choose from 15 scenarios that mimic the conditions of the greatest financial crises in history, including the Great Depression, 1970s stagflation, the 2000 dot-com bubble burst, and the 2007 and 2008 global financial crises.

“The goal of the retirement stress test was to give advisors and clients an idea of ​​what adjustments are like during difficult times,” Fitzpatrick said.

Fitzpatrick said the company is working on enhancements to offer scenarios and timeframes that advisors can create themselves.

Another enhancement is the ability for advisers to compare different investment strategies to see how they handle stressful events, he said.

Income Lab CEO Johnny Paulsen said in a statement, “Retirement stress tests to date have largely focused on how the situation unfolds when portfolios take a hit and cause significant anxiety among clients. I was focused on making it worse,” he said. “This new approach to realistic stress testing gives retirees greater confidence by showing that they can get through tough times with typically minor, temporary adjustments without major lifestyle changes. .”

The Retirement Stress Test tool is available as part of the company’s retirement income management software. Costs start at $125 per month per advisor/paraplanner involved in Income Lab planning if he is a company with 10 or more people, or if he is the only advisor working with Income Lab That would be $143 per month per person for him. Households with two to nine people pay $134 per person per month, according to the company.

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