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Brandes Investment PartnersValue Specialists Since 1974
Brandes Retirement Simulator
WELCOME
Happy Retirement

Brandes Investment Partners presents the Brandes Retirement Simulator, an interactive program that allows you to model your future income, expenses and investment strategy to simulate possible financial outcomes over your lifetime.

Using Monte Carlo modeling, the Simulator will show you the range of good, median and bad outcomes based on your customized inputs and assumptions.

The Simulator also allows you to see the effect of including longevity insurance* in your projections. Longevity insurance may reduce both the probability of eventually running out of assets and reduce your current worry about that eventuality.

We have provided a Helpful Hints function in the right panel on each page. When you click in an input field then information, explanation or instructions will appear in that right panel for those inputs where we think you may need additional information. Note that many input fields are already filled in with default entries as examples of typical inputs. You should change these as appropriate to your personal and financial input, as well as modifying any of the investment assumptions in the Simulator. After you have run the Simulator, you will have the option to save and print the output (including a summary of your inputs).

To better understand how to use this report, we recommend viewing the video tutorial located in Helpful Hints panel. The tutorial briefly goes through examples of the charts included in the output report and shares how we believe the Simulator can be used to help design a retirement portfolio that better meets your individual needs.

Confidentiality

Brandes Investment Partners does not access or retain any of the personal information, assumptions or projections used in the Simulator. Your name and email are requested only so that we may measure use of the Simulator in order to enhance its usefulness to advisors and investors.

Contact Us

If you would like more information or assistance, please contact us at simulator@brandes.com

*Brandes Investment Partners does not offer longevity insurance

Click to view video tutorial
PERSONAL

Age calculation
Name
Email
Age
Real Age
Expected age of retirement
Country
select
Gender
select
Helpful Hints

Confidentiality: Brandes Investment Partners does not access or retain any of the personal information, assumptions or projections used in the Simulator. Your name and email are requested only so that we may measure use of the Simulator in order to enhance its usefulness to advisors and investors.

What is “Real Age”? Your real age takes into account individual health and lifestyle factors that may increase (or reduce) your life expectancy compared to the average for your chronological age.

Click here to pop-up the Virtual age Calculator to get an estimate of your real age (also known as "virtual age").

The virtual age calculator was developed by Peter Russell whose site may be accessed by pasting www.peterrussell.com/Odds/VirtualAge.php into a separate browser window.

Important: after inputting all your information on this and other pages, you will find the "Run Simulation" button at the bottom of the Spending page

INCOME

Pre-Retirement
Current annual income
Expected income growth rate until retirement
Current effective tax rate
Post-Retirement
Annual Income after retirement
Income Growth after retirement
Age at which income stops
Do you want to change your future tax rate?
select
Future tax rate 1 [%] Effective at age
Future tax rate 2 [%] Effective at age
Helpful Hints
 

This is your annual pretax income excluding any pension or annuity income listed elsewhere in the Simulator

Current effective tax rate is the average total tax rate on your income, including federal and local income taxes

This income excludes any pensions or annuities listed elsewhere in the Simulator. It is intended to include pretax income from part-time employment, consulting, etc., as many people continue to have some work-related income even after they have retired from their primary job.

This income level is used in the Simulator once you reach the "expected age of retirement" that you selected.

Do you want to include a rate of increase in that part-time or consulting "after-retirement" income?

This is the age where you are fully-retired and no longer expect to be receiving employment income

If you expect your average tax rate to change, either due to changes in your situation or for other reasons, answer "yes" here

PENSIONS/ANNUITIES

 
Expected pensions/annuities starting at retirement age
Do these pensions/annuities include any cost-of-living adjustment ("COLA")
select
If yes, what cost-of-living adjustment ("COLA") would be assumed?
Do you want to include any other pensions or annuities?
select
Annual payment Start Age Growth rate
Pension or Annuity 1
Pension or Annuity 2
Pension or Annuity 3
Pension or Annuity 4

Longevity Insurance
Age when any longevity insurance annuity would start ("vesting age")
select
Do you want the Simulator to suggest an appropriate amount of longevity insurance annuity?
select
How much should the longevity insurance annuity pay out each year?
Helpful Hints
 

This number should include Social Security and other pensions that will start at the retirement age you specified previously.

Any pensions or annuities that start at a different age should be entered in the "Other Pensions and Annuities" section below

Social Security does have a cost-of-living adjustment ("COLA"). Other pensions or annuities may, or may not. Your answer should be "yes" if any of your retirement age pensions/annuities have a COLA.

This number should be your estimate of the average COLA across all the pensions/annuities in this section

If you have any pensions or annuities expected to start at a different age from your retirement age, answer yes, and include the pretax income in this section

Longevity insurance provides an annuity that starts only after you reach a specific advanced age. The older the age you specify, generally the higher the eventual annuity. To maximize annuity payouts, there is no payout or return of premium paid if that age is not reached.

To omit longevity insurance, select “No” and enter 0 in the amount. Also select “No” if you prefer to choose your longevity insurance, and enter the amount. Select “Yes” and the Simulator will choose an optimized amount. If you later decide to change the Simulator's choice, update the amount and rerun the simulator.

This is the annuity payout selected if you reach the vesting age. The higher the annuity selected, the higher will be the premium that is paid out of your initial investment portfolio

Longevity insurance can provide an annuity that starts only if you reach a specific advanced age. The older the age you specify, generally the higher the eventual annuity. But if you do not reach that age, there is no payout and no return of premium paid.

This maximizes the annuity payments. There are policies that offer death benefits or return of premium provisions, but these are not included in the Simulator.

ASSETS

Initial Investment Portfolio
Equity
Fixed Income
Cash
Total  
Asset Assumptions
Expected after-tax equity return
Expected after-tax fixed income return
Expected after-tax cash return
Desired safety cushion
Do you want to change the volatility and correlation assumptions?
select
Volatility, equity returns
Volatility, fixed income returns
Volatility, cash returns
Correlation between equity and fixed income
Correlation between equity and cash
Correlation between fixed income and cash
Helpful Hints

Enter your current portfolio values in stocks, bonds and cash. The Simulator will fill in the percentage amounts and total.

To provide perspective, the highest total annualized pretax return on the S&P 500 over any calendar decade since 1926 was 19.4% in the 1950s. The lowest was -0.9% in the 2000s. The simple average return over the period 1926-2010 is 11.9%.

We caution that entering long-term net asset return assumptions over 15%, or below -2% would generally be outside the range of returns historically experienced by U.S. equities

To provide perspective, the highest total annualized pretax return on long-term U.S. treasury bonds over any calendar decade since 1926 was 12.6% in the 1980s. The lowest was -.01% in the 1950s. The simple average return over the period 1926-2010 is 5.6%.

We caution that entering long-term net asset return assumptions over 10%, or below -2% would generally be outside the range of returns historically experienced by U.S. treasury bonds.

The Simulator provides a "safety cushion" feature, allowing you to select a minimum asset level, below which you would not want assets to go. Depending on other input assumptions, assets may still drop below this safety cushion, but the Simulator is designed to select an optimum level of longevity insurance to reduce the chance of this happening. The higher the safety cushion, generally the higher the recommended longevity insurance and the lower the median outcome for the asset projection. For this reason, the default value of the safety cushion is set at zero. Money death is deemed to occur if assets drop below the safety cushion, so if it is set at zero, money death occurs when all assets are gone.

These assumptions will be applied to the simulated returns in your portfolio. They may be affected by what type of assets you expect to own in the asset class. For example, the volatility of long maturity bonds could generally be higher than that of intermediate or short-maturity ones. Similarly, volatility of emerging market equities may be expected to be higher than domestic stocks.

The default values for volatility and correlations for each asset class have been selected taking into account historical returns on each asset class. For equities both global and U.S. equity measures were reviewed, and for fixed income and cash, just U.S. measures. They are not predictions and we strongly recommend that users input their own estimates.

For definitions of volatility and correlation, please see the About page.

REBALANCING

 
Investor Type
select
Equity percentage change allowed before rebalancing
Fixed Income percentage change allowed before rebalancing
Cash percentage change allowed before rebalancing
Do you want to change your future asset allocations at specific ages?
select
  Equity Fixed Income Cash
Age of reallocation 1
Age of reallocation 2
Age of reallocation 3
Age of reallocation 4
Helpful Hints
 

You are required to select a rebalancing approach. A "Passive Investor" never rebalances. A "Disciplined Investor" has their portfolio rebalanced to the desired allocation by the Simulator whenever any asset class moves more than the "percentage change allowed" that is selected.

You can use this option to re-set your asset allocation up to four times at future ages that you specify. For example, this can be used to shift your allocation gradually at more advanced ages.

FLOWS

 
Do you want to add or withdraw money at specific ages?
select
Flows in/out of investment portfolio (after tax)
Inflow 1 at age
Inflow 2 at age
Inflow 3 at age
Inflow 4 at age
 
Outflow 1 at age
Outflow 2 at age
Outflow 3 at age
Outflow 4 at age
Helpful Hints

You may use this feature to include any significant projected expenditures or cash inflows over and above the normal income and spending. For example, you may be expecting a purchase or sale of real estate, or sale of business. For consistency, any amounts entered in this section should be after-tax estimates. You will also need to specify an age at which these cash flows may occur, even if that is just an estimate.

Note that you will have an opportunity to include educational expenses (e.g. for college fees, etc.) in the next section.

CHILDREN

 
Do you want to include specific spending assumptions for children?
select
High School or Secondary School Graduation age
Annual spending on each child before high school graduation
Annual spending on each child after high school until support stops
Children Current age Age when income support stops
Child 1
Child 2
Child 3
Child 4
Child 5
Child 6
Helpful Hints

This spending can be for any reason, although the section is designed primarily for educational spending. While the heading says "children", the input can be used for any such spending on grandchildren or others.

These amounts are added to the annual spending you have already input. Please be careful not to double-count.

These amounts are added to the annual spending you have already input. Please be careful not to double-count.

SPENDING

Pre-retirement (All spending amounts are after-tax)
Current annual spending
Growth in expected spending rate until retirement
Estimated spending in final year before retirement
Post-retirement (All spending amounts are after-tax)
Annual spending after retirement
Expected growth in spending after retirement
Do you want to specify healthcare spending?
select
Annual spending on healthcare after retirement
Expected growth in healthcare spending after retirement
Age when healthcare spending growth accelerates
Expected growth rate for healthcare spending at advanced age
Helpful Hints

This refers to spending prior to the age you selected earlier as your "Expected Age of Retirement"

It provides you with an estimate of your spending in the last year before retirement, based on the spending and growth assumptions you just selected. It may help guide your selection of a number for annual spending after retirement.

You can use this option to reflect growth in annual spending due to inflation.

If you specified educational expenses in the “Children” page, please make sure not to double-count. Don’t include them again in your annual spending here.

You can use this option to reflect growth in annual spending due to inflation.

You can use this option to reflect growth in annual spending due to inflation.

Selecting "yes" allows you to add specific assumptions for healthcare spending that may be different from overall post-retirement spending.

As an example, a user may want to simulate an annual healthcare expense that grows faster than normal spending and will accelerate even more at an advanced age.

Definitions of Terms and Assumptions
1. Money Death is a simple concept: the possibility that an investor outlives his or her assets. More specifically, many retirees are dependent on their invested assets to provide a substantial part of income in retirement. Market events, excessive spending, or poor investment results may all contribute to those assets declining during the retirement years. Continuing withdrawals to maintain the retiree's lifestyle may accelerate the asset decline to minimal levels. If the retiree is able to maintain an acceptable lifestyle from lifetime pension and annuity income, then this loss of assets (while regrettable) may be tolerable. For those who do not have the cushion of sufficient lifetime income, "money death" results in financial disaster.
2. Real Age Your real age takes into account individual health and lifestyle factors that may increase (or reduce) your life expectancy compared to the average for your chronological age.
3. Safety Cushion The safety cushion is a minimum asset level, below which you would not want assets to go. Depending on other input assumptions, assets may still drop below this safety cushion, and the Simulator is designed to select an optimum level of longevity insurance to reduce the chance of this happening. The higher the safety cushion, generally the higher the recommended longevity insurance and the lower the median outcome for the asset projection. Money death is deemed to occur if assets drop below the safety cushion, so if it is set at zero, money death occurs when all assets are gone.
4. Investment Performance Calculations Investment returns are calculated based on user input assumptions, which include annualized returns on equity, fixed income and cash after all taxes and fees. These user inputs also include volatility and correlation assumptions. Calculations are based on a Monte Carlo simulation applying a normal distribution.
5. Default assumptions for volatility and correlation The default values for volatility and correlations for each asset class have been selected taking into account historical returns on each asset class. For equities both global and U.S. equity measures were reviewed, and for fixed income and cash, just U.S. measures. The specific default values selected are judged by Brandes to be reasonable, but are not predictions and we strongly recommend that users input their own estimates.
6. Volatility Volatility measures the variability of different asset class returns around the mean returns as measured by the standard deviation of returns for each asset class.
7. Correlation Correlation measures how pairs of asset classes move together, but may not imply causation. Values close to 100% imply that these asset returns will tend to move in the same direction. Values close to -100% imply that asset returns will tend to move in opposite directions. Values close to zero imply that movements in asset returns are unrelated.
8. Mortality/Survivability Assumptions The sources and basis of the Mortality/Survivability assumptions were derived from a paper authored by John R. Wilmoth and Vladimir Shkolnikov (2011) and data from The Human Mortality Database retrieved on May 24, 2011. (http://www.mortality.org/)

Disclosures
This material was prepared by the Brandes Institute, a division of Brandes Investment Partners®. It is intended for informational purposes only. It is not meant to be an offer, solicitation, or recommendation for any products or services. The foregoing reflects the thoughts and opinions of the Brandes Institute.

Brandes Investment Partners is not a tax expert and does not provide tax advice. It is recommended that you consult a tax advisor on matters pertaining to taxes and your account.

Past performance is not a guarantee of future results.

Market conditions may impact performance. The performance results presented were achieved in particular market conditions which may not be repeated. Moreover, the current market volatility and uncertain regulatory environment may have a negative impact on future performance.

Unlike bonds issues or guaranteed by the U.S. government or its agencies, stocks and other bonds are not backed by the full faith and credit of the United States. Stock and bond prices will experience market fluctuations. Please note that the values of government securities and bonds in general have an inverse relationship to interest rates. Bonds carry the risk of default, or the risk that an issuer will be unable to make income or principal payment. There is no assurance that private guarantors or insurers will meet their obligations.

Brandes Investment Partners, L.P., does not sell or endorse any insurance policy. Longevity insurance is described for informational purposes only. Longevity insurance typically does not offer a death benefit or carry any residual value, regardless of whether the contract holder dies before or after the vesting age. Longevity insurance payments end upon the contract holder's death. Longevity insurance premium estimates are based on rates quoted by insurance companies that offer such policies. The premium estimates for each gender, actual age and vesting age combination are based on the best rates Brandes has found for that combination. These estimates are updated at least annually, but may be updated more frequently. The premium rates are checked by Brandes for reasonability and accuracy, but are not guaranteed. Available rates may have changed by the time a simulation is run by the user. The estimates should be used as illustrations only and do not imply that these rates are currently available from any specific insurance company.

Longevity insurance policies are offered in the United States by a limited number of insurance companies, but are not yet offered in most other countries. Generally, annuities contain mortality and expense charges, account fees, investment management fees, and administrative fees. Most annuities have surrender charges that are assessed during the early years of the contract if the contract owner surrenders the annuity. In addition, surrendering the contract before age 59 ½ may result in a 10% federal income tax penalty. Withdrawals of annuity earnings are taxed as ordinary income. Any guarantees are contingent on the claims paying ability of the issuing insurance company.

Investments offering the potential for higher rates of return also involve a higher degree of risk. Rates of return will vary over time especially for long-term investments. Rebalancing may result in transaction costs and tax consequences. Diversification and asset allocation do not assure a profit or protect against loss.

Copyright © 1998 - 2012 Brandes Investment Partners ® ALL RIGHTS RESERVED. Brandes Investment Partners® is a registered trademark of Brandes Investment Partners, L.P. in the United States and Canada. This Website may also contain trademarks of other companies.
Brandes Investment Partners
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The Brandes Retirement Simulator is calculating your results. This process should normally take under 30 seconds if you have selected your own amount for longevity insurance, and less than a minute if you requested that the Simulator choose this for you. However during periods of peak use, the Simulation could take two to three minutes to complete.
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This material was prepared by the Brandes Institute, a division of Brandes Investment Partners®. It is intended for informational purposes only. It is not meant to be an offer, solicitation, or recommendation for any products or services. The foregoing reflects the thoughts and opinions of the Brandes Institute.

Brandes Investment Partners is not a tax expert and does not provide tax advice. It is recommended that you consult a tax advisor on matters pertaining to taxes and your account.

Past performance is not a guarantee of future results.

Market conditions may impact performance. The performance results presented were achieved in particular market conditions which may not be repeated. Moreover, the current market volatility and uncertain regulatory environment may have a negative impact on future performance.

Unlike bonds issues or guaranteed by the U.S. government or its agencies, stocks and other bonds are not backed by the full faith and credit of the United States. Stock and bond prices will experience market fluctuations. Please note that the values of government securities and bonds in general have an inverse relationship to interest rates. Bonds carry the risk of default, or the risk that an issuer will be unable to make income or principal payment. There is no assurance that private guarantors or insurers will meet their obligations.

Brandes Investment Partners, L.P., does not sell or endorse any insurance policy. Longevity insurance is described for informational purposes only. Longevity insurance typically does not offer a death benefit or carry any residual value, regardless of whether the contract holder dies before or after the vesting age. Longevity insurance payments end upon the contract holder's death. Longevity insurance premium estimates are based on rates quoted by insurance companies that offer such policies. The premium estimates for each gender, actual age and vesting age combination are based on the best rates Brandes has found for that combination. These estimates are updated at least annually, but may be updated more frequently. The premium rates are checked by Brandes for reasonability and accuracy, but are not guaranteed. Available rates may have changed by the time a simulation is run by the user. The estimates should be used as illustrations only and do not imply that these rates are currently available from any specific insurance company.

Longevity insurance policies are offered in the United States by a limited number of insurance companies, but are not yet offered in most other countries. Generally, annuities contain mortality and expense charges, account fees, investment management fees, and administrative fees. Most annuities have surrender charges that are assessed during the early years of the contract if the contract owner surrenders the annuity. In addition, surrendering the contract before age 59 ½ may result in a 10% federal income tax penalty. Withdrawals of annuity earnings are taxed as ordinary income. Any guarantees are contingent on the claims paying ability of the issuing insurance company.

Investments offering the potential for higher rates of return also involve a higher degree of risk. Rates of return will vary over time especially for long-term investments. Rebalancing may result in transaction costs and tax consequences. Diversification and asset allocation do not assure a profit or protect against loss.

Copyright © 1998 - 2012 Brandes Investment Partners ® ALL RIGHTS RESERVED. Brandes Investment Partners® is a registered trademark of Brandes Investment Partners, L.P. in the United States and Canada. This Website may also contain trademarks of other companies.