Sunday, February 28, 2010

WealthRuler - Free Retirement Planning Tool from TD Ameritrade

WealthRuler (WR) is a free online service to help you decide how much you need to have saved up for retirement and how to get there. It is found at the TDAmeritrade site, and here is a link to the tool.

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WR is a MonteCarlo simulation tool which lets you enter all your portfolio assets, then gives you a report. In that sense, it is similar to FinancialEngines and FIRECalc. There is documentation that explains the assumptions and methodologies used. The result is an "Action Plan" that tells you "On the right track" or "You have a Shortfall" with how much additional to save per month). One can adjust retirement age, whether you work part-time, SS benefits, as well as one-time expenses and/or income.

One can enter the dollar amount of your accounts. For each "account" that you enter, you give the type of account (IRA, 529, 401k, taxable), the additional annual contribution until retirement, as well as the asset allocation (% stocks, % bonds, % cash), but cannot give the individual securities ticker symbols. You do not have to enter your TDAmeritrade assets as those are pulled in automatically for you. Your entered data has persistence from one session to another, and the data had persistence from one computer to another when you log into your TDAm account. But actually you might not have the TDAm account at all to use the tool. 

However, if you are a TDAm client, you'll not only get the benefits described above, you can use WealthRuler to develop a personal action plan for your account that provides suggestions on the next steps to take and tools you may be interested in. You'll also be able to save your information so you can come back and refine it whenever you choose.

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You can enter a number for your monthly retirement expenses, but it will try to figure those out from your annual income (which you can enter) as well. The assumption for the "figuring out" appears to be 80% of your annual income, so some folks won't like that, but you would then just override the number.

The results are pretty simple and show what your assets might be in a "Poor Market" and an "Average Market" which are defined in the documentation.

Not satisfied with the results of your current profile? What if you increase your monthly savings? Is it time to re-evaluate your investment allocation? WealthRuler lets you refine and edit your financial profile to see how various real-world scenarios, including market conditions, will impact your assets over time and at retirement – so you can take concrete steps today to help you stay on track.

WealthRuler does not make specific asset class or security recommendations. Users enter criteria including desired retirement age, income and planned expense information, plan end date, and current value and allocation percentages of stocks, bonds and cash. The tool classifies a user into one of five portfolio strategy/risk tolerance models. These models, combined with time horizon, determine the return and risk assumptions used in the calculations. The tool runs multiple simulations to determine the likelihood of plan success, during average and poor market conditions. Results may vary with each use and over time.

Access the website at:


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