We all know and love the What-If section in Silver Financial Planner. Here are three excellent features of the What-If that you might be missing!
1) Monte Carlo Area Graph View
The Monte Carlo is a great comparison tool when using Silver’s What-If. A 70% Monte Carlo success rate can be achieved in a multitude of ways. Use the What-If to model how increased savings, reduced spending, delayed retirement, etc. can positively affect the Monte Carlo success rate. Model how multiple paths can lead to overall success for your client’s financial future. If you suggest your clients delay retirement by two years, and they let you know that is not up for consideration, use the What-If to model alternative paths to success. Illustrate how the clients can achieve the same Monte Carlo success rate without delaying retirement, by working diligently to increase pre-retirement savings or moderate spending needs post-retirement.
The Monte Carlo area graph provides an alternative view of the Monte Carlo line graph. The Monte Carlo area graph is available to view from the What-If section of Silver. The lightly shaded area of the graph is the range of retirement capital values from 10,000 simulation trials using randomized annual rates of return to illustrate 10,000 potential market futures. This area is further divided into segments representing 10% of the total trials. This collection of experimental results is produced by starting with the current financial plan, with all its detail and assumptions, and incorporating annual return fluctuation into the model.
Red line – Goal of 70% successful simulation trials
An individual trial that maintains a positive retirement capital balance during the entire life expectancy is considered a successful trial. We believe a successful retirement plan is defined as having at least 70% successful trials. The red line in the graph indicates where this goal falls in your plan.
Green Line – One trial showing an average fixed rate of return on investments
This line represents your retirement capital projection using a fixed investment growth rate each year. However, history shows that investment returns fluctuate. Therefore, this line should be used only as a reference point indicating where this scenario falls within the entire range of simulation trials.
Blue Line – Percentage of successful simulation trials for your retirement plan
This line indicates the division between successful and unsuccessful trials of your financial plan. The trials above this line provide enough retirement capital to meet all of your retirement needs.
2) What-If Comparison View
View two What If scenarios at once to provide a clear comparison using the Graph Display option on the What-If section of Silver. The options include single (default view), top to bottom (as pictured below), left to right, and overlay. Make changes on the What-If input and click recalculate What-If, or load a previously saved What-If. Select a graph display option from the top right corner of the window, as emphasized with the red circle in the screenshot below. Try the different views and pick your favorite!
3) Constant Dollar Option
The Retirement Summary Graph Report can display a line indicating amounts in “today’s dollars” overlaid on the bar-graph of inflated amounts. This helps your clients get a better feel for the growth and drawdown of their retirement capital. This graph is also found in the “What If?” scenario section and any saved “What-If?” reports.
To turn this option on, click the Report Selection menu. There you will find a new option “Show value over time in today’s dollars”. When selected, a “constant dollar” line shows the value of future retirement assets in today’s dollars, removing the effect of inflation. The line will display in yellow on the Retirement Summary Graph and What-If Retirement Summary Graphs.
