Kelley Rating (one asterisk = lowest, to five asterisks = highest):
- ease of navigation, design of interface and learning curve ***
- instructional documentation and help system ***
- carries out the goal of the product as advertised ****
- overall usefulness ****
NaviPlan version 10.0 addresses post-retirement planning, including allowing users to enter as many expenses as desired and have each expense start and stop at specified times.
EstateProfiler and Cygnus IncomeMax are needs analysis and retirement-planning tools for pre-retirement financial planning that do not include goal-driven portfolio allocations.
eMoney Advisor and Money Guide Pro are designed for use by financial managers. These programs provide web-based portfolio management with reports for direct client viewing and interaction.
Other programs focusing on portfolio and withdrawal planning for retired clients are becoming increasingly popular, and many of these programs are in development.
What Does It Do?
Retirement Income Navigator is a software tool for managing money during retirement when funds are being drawn out, as opposed to designing portfolios during the pre-retirement years when the object is accumulation based on personal risk tolerance. The goal of the program is to calculate the optimal balance between fixed-rate investments for income and investments in stocks for growth. Though the program has a bit of a learning curve, it is uniquely helpful to both the layperson and the financial professional.
This program is designed by Roger A. Katzenmaier and Kevin R. Katzenmaier and is based on their financial management work and Investment Scenario Generator methodology. It includes their book Financial Retirement Planning with the Retirement Income Navigator. Additional information and products from the authors may be found on the IGS Planning website.
The publisher also offers a number of reports and tutorials for the Retirement Income Navigator, detailing the program's features and functionality, with helpful graphical representations.
How Does It Work?
The program operates by dividing the retiree's portfolio into two types of investments. The first is invested in an income ladder that provides guaranteed income for a pre-determined number of years. The rest of the portfolio is invested in blue chip or growth equities. The program computes the necessary sale of stocks to further extend the income ladder. Stocks can be held for the long term. The program determines the optimal balance between fixed-rate investments and various categories of stock based on the client's income objective.
The interface for the Retirement Income Navigator consists of a single screen from which you open subscreens and enter information. The operation of the program is relatively straightforward once you learn the financial concepts involved.
You first enter an initial investment allocation among fixed rate, high-yield stocks, blue chip stocks and growth stocks, including dividend rates and holding periods. For fixed rate investments, you may enter a series of maturity years and related rates of return. You may change the names of the investment categories, as desired.
You may either enter a target income, and request the beginning capital value needed for it, or enter a beginning capital amount and ask the program to calculate the income it will produce.
Typically, the program results are obtained through these steps:
1. gather basic information on the client's capital, income need, projected number of retirement years and anticipated inflation;
2. enter the initial allocation of investments in the client's portfolio, including the estimated average annual total return, amount of dividends, stock minimum holding periods and fixed rate return;
3. ask the program to optimize the investments allocation, to determine whether the investments can support the annual income need;
4. break down the potential income streams from investments, including the potential use of annuities;
5. reallocate income to adjust for the end of annuity payouts; and 6. ask the program to optimize the investments allocation.
The program facilitates these steps through available choices and data entries at subscreens related to these classifications:
Calculate "Beginning Capital" -- You may select "Preserve Capital" to assure that the initial capital is not depleted as the program responds to the stated needs or select "Consume Capital" to allow the overall value of the portfolio to decrease.
Calculate "Annual Income Need" -- You may again select "Preserve Capital" or "Consume Capital."
"Payment Period" -- You may identify the frequency with which income payments will be made.
Calculate "Years in Scenario" -- The program calculates and displays how long the investment portfolio will support the indicated income need. You may also select "Preserve Capital" or "Consume Capital" here.
"Anticipated Inflation" -- You may enter whatever inflation projection you desire.
"Custom Income Needs" -- Instead of having the program calculate the income you may enter income target amounts for up to five different sets of years, with percentage increases for each set.
"Other Sources of Income" -- You may enter up to 10 different sets of investment contributions to be made for stated periods of time and invested in identified categories.
"Multiple Allocations" -- You may allocate investments among fixed rate, high-yield stocks, blue chip stocks and growth stocks and direct reallocation of the portfolio at specified time horizons.
"Inflate Dividends?" -- Directs whether dividend amounts are to be increased by the inflation rate.
After all data is entered and choices are selected, you click on "Optimize Investment Allocation" to direct the program to reallocate the investments to achieve the goals you have defined. You may direct the program to reallocate for the maximum ending capital, find the highest available income or find the lowest capital that will support the needed income.
The opening screen displays the starting balance and the balance after the number of years in the scenario for each asset category. This display may be set to either actual dollars or deflated dollars reflecting buying power at the end of the scenario.
Retirement Income Navigator displays and prints out a year-by-year tabular list that includes the investment allocations, total capital and effective growth rate, and an annual tabulation of the source of income flows. You may display and print a screen reflecting your initial data entries and a list of the transactions (such as stock sales) required to maintain the targeted income distributions.
The program also generates a line graph of year-by-year investment balances distributed among fixed rate, blue chip stocks and growth stocks and a pie chart reflecting the initial investment allocation among these categories.
The context based help file includes operating instructions and explanations of the function of each screen of the program. Technical support is available by telephone, fax, email or postal mail.
How to Get It
Retirement Income Navigator may be licensed for $299 per single user. It has a 60-day return period and includes six months of maintenance coverage. Additional maintenance coverage is available for $59 annually. You may contact the publisher at:
Brentmark Software, Inc.
3505 Lake Lynda Drive
Orlando, FL 32817
Trusts & Estates magazine is pleased to present the monthly Technology Review by Donald H. Kelley -- a respected connoisseur of the software and Internet resources wealth management advisors use to further their practices.
Kelley is a lawyer living in Highlands Ranch, Colo. and is of counsel to the law firm of Kelley, Scritsmier & Byrne, P.C. of North Platte, Neb. He is the co-author of the Intuitive Estate Planner Software , (Thomson - West 2004). He has served on the governing boards of the American Bar Association Real Property, Probate and Trust Section and the American College of Tax Counsel. He is a past regent and past chair of the Committee on Technology in the Practice of the American College of Trust and Estate Counsel.
Trusts & Estates has asked Kelley to provide his unvarnished opinions on the tech resources available in the practice today. His columns are edited for readability only. Send feedback and suggestions for articles directly to him at [email protected].
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