CA2993849A1 - Computer-based retirement planning methods and apparatuses - Google Patents

Abstract

There is described a computer implemented method comprising calculating a current living standard cost, calculating potential retirement spending, calculating a difference between the current living standard cost and the potential retirement spending and outputting the difference.

Description

COMPUTER-BASED RETIREMENT PLANNING
METHODS AND APPARATUSES
FIELD OF THE DISCLOSURE
[0001] The present disclosure relates to computer-implemented planning tools. More specifically, the disclosure relates to computer-implemented tools for planning retirement.
BACKGROUND

[0002] How do you know if you're saving enough for retirement?
Conventional retirement planning tools use a final earnings replacement rate, usually targeted at around 70% final earnings replacement. This benchmark is relied on by advisors, academics and public policy analysts around the world.
It has become enshrined in our pension systems and financial planning software, and it drives the research that determines whether populations are prepared (or not) for retirement. Unfortunately, the 70% final earnings replacement rate may not be a valid measure or benchmark. There have been no studies that examined a sample of real (not made-up) workers, followed them into retirement and tested whether those hitting 70% maintained their living standards after retirement.

[0003] An example retirement method is discussed in U.S. Patent App.
Publication No. 20070061238, the entire content of which is incorporated herein by reference.
SUMMARY

[0004] According to an aspect of the disclosure, there is provided a planning tool that compares how much money the worker has to support his or her personal consumption of goods and services before and after retirement.
Such a tool may help workers to understand and appreciate (1) the "cost" of their current living standards, (2) what spending they will likely have in retirement to support the continuity of those living standards and/or (3) how financial decisions will impact those living standards after retirement. They may then implement strategies to overcome any gaps, such as saving more (or less), changing their retirement date or adjusting their retirement lifestyle to make the most of their budget. With financial literacy increasingly becoming a major concern, as well as the greater responsibility for individuals to manage their own retirement financial security, understandable advice that "real" people can access will go a long way.

[0005] According to an aspect, there is provided a computer-implemented method comprising: calculating a current living standard cost; calculating potential retirement spending; calculating difference between the current living standard cost and the potential retirement spending; and outputting the difference.

[0006] In some embodiments, the method further comprises obtaining current living standard cost data, wherein calculating the current living standard cost comprises calculating the current living standard cost as a function of the current living standard cost data.

[0007] In some embodiments, the method further comprises obtaining potential retirement spending data, wherein calculating the potential retirement spending comprises calculating the potential retirement spending as a function of the potential retirement spending data.

[0008] According to an aspect, there is provided an apparatus comprising:
a processor; and a memory coupled to the processor, the memory having processor-executable instructions stored thereon, that, when executed, cause the processor to implement the method described herein.

[0009] According to an aspect, there is provided a computer-readable storage medium having processor-executable instructions stored thereon, that, when executed, cause the processor to implement the method described herein.

[0010] Other aspects and features of the present disclosure will become apparent to those ordinarily skilled in the art upon review of the following description of the specific embodiments.

, BRIEF DESCRIPTION OF THE DRAWINGS

[0011] Figure 1 is a flow chart of a method according to some embodiments;

[0012] Figure 2 is a block diagram of a client device according to some embodiments; and

[0013] Figure 3 is a block diagram of a server according to some embodiments.
DETAILED DESCRIPTION

[0014] According to an aspect, there is provided a computer-based method that helps working households prepare for retirement by computing current spending for the individual (and spouse if applicable) and anticipated spending ability in retirement for the individual (and spouse if applicable), and compares the two. The method may be implemented on an apparatus comprising a processor and a memory. The memory may store instructions that, when executed by the processor, implement the method as described herein.

[0015] The apparatus may be a client device such as (but not limited to) a desktop computer, a laptop, a mobile device, a tablet or the like. The client device may comprise at least one user interface for receiving input from a user (e.g. keyboard, touchscreen, etc.) and a display (e.g. monitor, touchscreen, etc.).
The apparatus may be a server or other network element that receives input from a client device over a network. The method may also be implemented by a combination of one or more client devices and one or more servers.

[0016] Figure 1 is a flow chart of a method according to some embodiments. At block 102, a "cost" of current living standards (or "current living standard cost") is calculated. This calculation may comprise calculating current spending on personal (and spousal if applicable) consumption in given fiscal years. In other words, the residual income after taxes, savings, and money spent on dependents.

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[0017] The method may optionally comprise (prior to the current living standard cost calculation) obtaining current living standard cost data including, but not limited to, personal data on household-level employment earnings, taxes, number of children, savings within year, mortgage payments, rent, and/or debt withdrawals. The data may comprise administrative and/or client data. At least some data may be obtained/received as user input (e.g. via the user interface).
At least some data may be obtained/received over a communications network (e.g. from a server). The average of the available fiscal years savings may be averaged to generate "typical" annual spending.

[0018] Obtaining the current living standard cost data may comprise obtaining at least some of the data described above over the communications network (e.g. Internet, local area network, etc.). For example, the method may comprise sending requests to one or more networked devices (e.g. server) over the Internet for one or more pieces of data used in the calculation. As a more specific example, personal data may be requested from private or public servers or other databases. The obtaining may further comprise receiving at least some of the requested data.

[0019] Obtaining the current living standard cost data may optionally include retrieving at least some of the data described above from a local storage (e.g. memory). For example, where a display includes multiple data fields to fill in, one or more of the data fields may be "auto-filled" based on stored data and/or user input. Auto-fill data may be stored locally (e.g. employer and/or record _ keeper database) and/or retrieved over a network (e.g. Internet). The autofill function may, for example, perform a live internet search to retrieve and fill in data unknown by the user.

[0020] At block 104, potential spending in retirement (or "retirement spending") is calculated. This calculation may be based on personal characteristics (which may, for example, be received as user input), as well as income and wealth data including, but not limited to: current age, intended age of retirement, financial savings, debt, anticipated financial savings, pension plan entitlements, social security benefits, anticipated inheritance, anticipated financial market rates of return, and/or other financial planning choices.

[0021] The method may optionally comprise (prior to the potential retirement spending calculation) obtaining potential retirement spending data.

The potential retirement spending data may comprise income and wealth data, personal characteristics, etc. At least some data may be obtained/received as user input (e.g. via the user interface), retrieved from local memory storage (e.g.
auto-fill) and/or obtained/received over a communications network (e.g. from a server or other client device) similar to the possible methods of obtaining current living standard cost data described above.

[0022] At block 106, the difference between the calculated current living standard cost and the calculated potential retirement spending is then calculated.
This difference may indicate how well spending (living standards) will be sustained in retirement. The calculated difference may be output (e.g. on a display), stored on a server, and or transmitted to another device (e.g.
client device).

[0023] At block 108, the difference is output. The output may be displayed on a display or touchscreen. Alternatively, the output may be transmitted to another device (e.g. a client device).

[0024] Optionally, the method may further include receiving input of additional data and/or receiving input modifying previously obtained data. For example, additional expenses may be added before and after retirement. Other data such as retirement age, anticipated savings, rates of return, etc. may be modified. Other options for modifying the calculations described above may also be provided.

[0025] Optionally, at block 110, the difference between the "cost" of current living standards and the potential spending in retirement is then recalculated based on the additional and/or modified data.

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[0026] Figure 2 is a block diagram of a client device 200 according to some embodiments. The client device includes a processor 202 and a memory 204 coupled to the processor 202. The memory stores processor-executable instructions that, when executed, implement the method of Figure 1. The client device 200 further includes a user-interface 206 for receiving user input and a display 208, each coupled to the processor 202. In some cases, the user interface 206 and the display 208 may be the same component (e.g.
touchscreen). The user interface 206 may receive input including the data described above. The display 208 may present output (e.g. calculation results) and/or requests for user input, for example.

[0027] The client device 200 may further comprise a communications subsystem 210 coupled to the processor 202. The communications subsystem 210 may comprises a receiver, transmitter and/or transceiver or other hardware and/or software components for communicating over a communications network.
The communications subsystem 210 may, for example, allow communication over a wireless network. The communications subsystem 210 may be used for obtaining at least some data, as described above, from one or more servers or other client devices. In this example, the communication system 210 includes a transceiver 212 and an antenna 214.

[0028] Figure 3 is a block diagram of a server 300 according to some embodiments. The server includes a processor 302 and a memory 304 coupled to the processor 302. The server further includes a communications subsystem 310 coupled to the processor 302. The communications subsystem 310 may comprises a receiver, transmitter and/or transceiver or other hardware and/or software components for communicating over a communications network. In this example, the communication system 310 includes a transceiver 312 and an antenna 314. The memory 304 stores processor-executable instructions that, when executed by the processor 302, implement the method of Figure 1. For example, the server 300 may obtain data from one or more client devices or other servers and perform the method of Figure 1 accordingly.

[0029] The methods described herein above or below may be performed by an apparatus such as the client device 200 of Figure 2 or the server 300 of Figure 3 (or a combination of one or more client devices and servers). For example, a client device (such as the client device 200 in Figure 2) may be in communication with a server (e.g. the server 300 of Figure 3). The client device may obtain at least some data, while calculations are performed at a server based at least in part on data obtained at the client device. At least some data for the calculations may also be obtained by the server from other sources and/or , may already be stored on the server. Alternatively, the method may be performed entirely by the client device or by the server.

[0030] An example method for a computer-based retirement planning method according to some embodiments is described below.

[0031] Step 1: Compute Typical Annual "Money to Spend" for Individual (and Spouse if Applicable) based on data in all available past Fiscal Years. This step may include receiving input and/or obtaining (e.g.
over a network) household information and income flow data as set out below.

[0032] Input: Household information = Household size (earners and dependents); and/or = Marriage status (single, married, common-law).

[0033] In fiscal year X:

[0034] Input: Total income flows in fiscal year for individual (and Spouse if applicable) including, but not limited to:
= Employment earnings;
= Government transfers;
= Investment Income;
= Savings (contributions and withdrawals);

= Contribution to employer pension plan;
= Debt other than primary housing (draws and repayment);
= Mortgage payments;
= Other sources of income (cash transfers, inheritance, child support, etc);
= Taxes (income and payroll);
= Primary residence rent payments; and/or = Insurance premiums and payments.
= Calculate and Output:
= Household "Money to Spend" in fiscal year X; and/or = Individual (or couple if applicable) "Money to Spend" in fiscal year X.

[0035] The calculation may include adding incomes and deducting expenses (e.g. from the inputs set out above) and dividing the result in accordance with the household information.

[0036] Optionally, the initial calculated "money to spend" may be output (e.g. on a display) for a user to determine whether the result seems correct.
The method may include receiving input for adjustments to the calculation.
Optionally, data indicating unusual sources of income (sale of an expensive durable, etc.) or expenses (down payment on a home, medical expenses, etc.) may be added.

[0037] Thus, this step may optionally include recalculating and outputting:
= Household "Money to Spend" in fiscal year X; and/or = Individual (or couple if applicable) "Money to Spend" in fiscal year X.

[0038] The step may further comprise continuing computing the "Money to Spend" for each available fiscal year.

[0039] When complete, this step may further comprise displaying the "Money to Spend" for each available fiscal year, and the average across all years.

[0040] The method may further comprise prompting a user to choose "typical" needed "Money to Spend" based on information.

[0041] The method may further comprise storing each fiscal year's "money to spend" for future calculations.

[0042] The method may further comprise recalculating individual (or couple if applicable) typical annual "money to spend" for Step 3.

[0043] Step 2: Calculate Anticipated Available "Money to Spend" in Retirement at age X (e.g. 70). This step may include receiving input and/or otherwise obtaining (e.g. over a network) information and projection data set out below.

[0044] Input: Current information for individual (and Spouse if applicable) values as of the end of the fiscal year including but not limited to:
= Age;
= Current accumulated Social Security benefits;
= Current employment earnings;
= Years of residence;
= Employer pension plan accumulated benefits;
= Current employer pension plan features;

= 10 = Value of home; and/or = Mortgage debt of primary residence.
= Input: Projection Assumptions for individual (and Spouse if applicable) (default or input) including, but not limited to:
= Age of retirement;
= Benefit take-up ages (for Social Security);
= Annual savings contribution level;
= Annual employer pension plan benefits accumulation;
= Annual mortgage payments;
= Term of mortgage;
= Annual primary residence rent payments;
= Financial market rate of return;
= Real estate growth of primary residence;
= Wage growth;
= Inflation rate;
= Marriage status at retirement;
= Choice of drawdown for retirement savings (annuity, fixed percentage, etc.);
= Choice of drawdown for housing equity;
= = Assumptions about changes in expenses; and/or = Other strategy choices (purchase of insurance).

= 11

[0045] Input: Projected Annual Income Flows in Retirement for individual (and Spouse if applicable) (input or computed) including, but not limited to:
= Post-retirement earnings;
= Government transfers;
= Investment Income;
= Savings withdrawals;
= Annuitized income from savings;
= Employer pension plan payments;
= Debt other than primary housing (draws and repayment);
= Mortgage payments;
= Other sources of income (cash transfers, inheritance, etc.);
= Taxes (income and payroll);
= Primary residence rent payments;
= Insurance premiums and payments; and/or = Option to include unusual sources of income (sale of an expensive durable, etc.) or expenses (down payment on a home, medical expenses, etc.).

[0046] Calculate and Output:
= Individual (or couple if applicable) anticipated available "money to spend" in retirement (age X) for Step 3.

[0047] Step 3: Analysis

[0048] Compare:

. . 12 = Individual (or couple if applicable) typical annual "money to spend"; and = Individual (or couple if applicable) anticipated available "money to spend" in retirement.

[0049] Compute:
= the shortfall: (a. - b.);
= ratio of shortfall: (a. - b.) / a.; and/or = ratio: b. / a.

[0050] The method may optionally further include allowing a user to change one or more data inputs to reconcile the difference.: e.g., postponing retirement, saving more, selling one's home, moving to a lower-cost home, buying insurance, delaying Social Security, etc.

[0051] The method may optionally include calculating and outputting the probability of having levels of "money to spend" in retirement at various ages.

[0052] The method may optionally include providing information concerning the needs and wants in retirement, and discretionary spending.

[0053] The projection to future retirement "money to spend" may be stochastic and may simulate thousands of economic scenarios. Such calculations cannot be performed on pen and paper while allowing modification of data inputs ¨ and recalculation to allow a user to view results for multiple variations and/or scenarios. For example, if a user or client doesn't like a first calculation, the may decide to change one or more data such as a savings rate and recalculate. Such modifications and recalculations may only be realistically achieved using computer hardware as described herein as opposed to mental or pen and paper methods which would be too complicated and time consuming to be implemented in a useful manner.

[0054] Furthermore, the computer-implementation may allow for gathering of data from network sources (e.g. server(s) and other client device(s)) as described above. One or more computer-implemented services may be used in connection with the apparatus as described herein to gather data in some embodiments. One example of such a service is YodleeTm.

[0055] According to some embodiments, at least one computer-readable medium may have stored thereon processor-executable instructions that, when executed, implement the methods described herein. A computer computer-readable medium may be in the form of internal memory, CD, flash drive, or any other physical storage medium suitable for storing such instructions.

[0056] What has been described is merely illustrative of the application of the principles of the disclosure. Other arrangements and methods can be implemented by those skilled in the art without departing from the scope of the present disclosure.

Claims (5)

CLAIMS:

1. A computer-implemented method comprising:
calculating a current living standard cost;
calculating potential retirement spending;
calculating a difference between the current living standard cost and the potential retirement spending;
outputting the difference.

2. The method of claim 1, further comprising obtaining current living standard cost data, wherein calculating the current living standard cost comprises calculating the current living standard cost as a function of the current living standard cost data.

3. The method of claim 1, further comprising obtaining potential retirement spending data, wherein calculating the potential retirement spending comprises calculating the potential retirement spending as a function of the potential retirement spending data.

4. An apparatus comprising:
a processor; and a memory coupled to the processor, the memory having processor-executable instructions stored thereon, that, when executed, cause the processor to implement the method of claim 1.

5. A computer-readable storage medium having processor-executable instructions stored thereon, that, when executed by a processor, cause the processor to implement the method of claim 1.