Executive Summary:
The
Otar
Retirement Calculator calculates an individual’s retirement asset values based
on market history since 1900. What makes it different from other retirement
calculators is that it does not require an assumed average portfolio growth
rate, average inflation or any Monte Carlo simulation.
Instead of presenting a "forecast" of a client's future financial picture based on your assumptions, Otar Retirement Calculator presents a "aftcast" of client's potential outcomes based on actual market history.
Benefits for the investor:
It helps the user visualize realistic outcomes that are not available with conventional retirement calculators.
It includes an algorithm that designs a mix of investments and life annuities for maximum, life-long income security.
It
allows any mix of equities, nominal bonds, inflation-indexed bonds and cash
in the portfolio.
Benefits for the advisor:
It produces realistic and credible retirement planning strategies independent of client's (or advisor's) high expectations. Therefore, it increases client's respect and confidence for the competence of his/her advisor.
When you forecast an "average" portfolio growth rate and inflation, your client will more or less expect that performance year-after-year. With the Otar Retirement Calculator, there is no prediction or assumption, only a factual presentation of all historic outcomes. These outcomes include a range of lucky and unlucky outcomes. Let your client decide how much to save, when to retire, how much to spend to improve the odds of successful retirement. Say good-bye to the business of crystal-ball gazing.
It may reduce the potential for future lawsuits which can occur as a result of overly optimistic projections that are given to clients in the current retirement planning practice.
Its
developer, Jim C. Otar, is a certified financial planner, a chartered market
technician and a professional engineer practicing in Thornhill, Canada. He
applies his technical background to research retirement and investment planning
issues. He developed this retirement calculator while he was writing his book
“High Expectations & False Dreams – One Hundred Years of Stock Market
History Applied to Retirement Planning”. He received CFP-Board Article
Awards in recognition of his meritorious financial planning articles both in
2001 and in 2002.
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