BlackRock has launched iRetire, a set of tools that provide advisors with what BlackRock calls a “whole new way” to develop a retirement plan and keep investors on track.
The difference between iRetire and other retirement calculators is a focus on retirement income instead of the nest egg, which BlackRock called an "outdated concept" and not what really matters to retirement planners.
According to recent research by the company, Baby Boomers want an average of $45,500 in annual income during retirement, but have a nest egg that can only provide about $9,000 per year. BlackRock President Rob Kapito said iRetire’s focus on income helps close this gap by showing investors their future prospects to help them make better decisions about how much they'll need to save and when to retire.
“Facing the possibility of living as much as two or three decades in retirement, financial advisors and investors need to consider longevity risk alongside market risk to determine the savings needed to generate the income wanted through retirement,” Kapito said in a statement.
Like other calculators, advisors input a client’s age and savings, as well as a desired annual retirement income; iRetire then estimates what income a client can reasonably expect. Advisors can use sliders to adjust various factors, and iRetire will adjust to show the impact that saving more, or working longer, or both, will have on the gap between expected and desired income. With this information, the advisor can then create a portfolio that addresses the gap or keeps a client on track.
iRetire also has a function for regular checkups and portfolio adjustments based on changes in the cost of future retirement income - for instance, if there is a change in interest rates. And because it accounts for assets held in outside accounts, advisors can use iRetire to suggest consolidating under an income-focused portfolio.
“We hear from advisors regularly that retirement is the No. 1 issue they are tackling, and that they need new tools to help them better manage their clients’ portfolios over the long term,” said Frank Porcelli, chairman of BlackRock’s U.S. wealth advisory business. “we will continue to invest in technology platforms that improve the advisor/client experience and package the resources advisors need to manage their practices.”