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Disclaimer: The QWeMA Group is not providing any investment or other financial advice of any kind or nature and these calculators are merely tools to be used by the user in the support of the marketing, sale, and promotion of products and services. In no event shall QWeMA Group, or any officer, director, principal, employee, agent or other representative of QWeMA Group, be liable for any damages, liabilities, expenses, or losses in any connection with the provision of any investment advice or recommendations made by the user of these calculators or its representatives whether in reliance on or use of the calculators or any ancillary materials or otherwise.

The 7 Most Important Equations For Your Retirement

The two Excel spreadsheets contain the coded equations.

After opening the file, be sure to ‘Enable Macros‘. Values in Yellow are at the disposal of the user and Green values are results.

The 7 Most Important Equations For Your Retirement - Excel 2003

The 7 Most Important Equations For Your Retirement - Excel 2007

Pensionize Your Nest Egg

Retirement Sustainability Quotient and Expected Financial Legacy:

The Retirement Sustainability Quotient and Expected Financial Legacy calculator described in Pensionize Your Nest Egg: How to Use Product Allocation to Create a Guaranteed Income For Life (Wiley Canada, August 2010), is provided here for your use and enjoyment.

To access an Implied Longevity Yield calculator, please visit the CANNEX website.

Your Money Milestones

Human Capital:
As you know from the introduction to Your Money Milestones (Human Capital: Your Greatest Asset), your human capital, during most of your working life, is your largest and most valuable asset. This doesn’t just apply to college kids in their early 20s or graduate students in their late 20s – this applies to you in your 30s, 40s, and even 50s and 60s. So what is your human capital worth today? Use this calculator to get an estimate.

Education Payoff:
Chapter 1 (Is the Long-Term Value of an Education Worth the Short-Term Cost?) discusses investing in your human capital through higher education. Are you or is someone in your family considering this kind of investment? Perhaps you’d like to explore what the long-term impact on your personal balance sheet of an investment in human capital would be. Take a look at the impact of adding to your human capital through investing in education with this calculator.

Life-Cycle Income Smoothing:
We learned in Chapter 2 (What is the Point of Saving Money Forever?) that the rational approach to saving is to save so that you can smooth consumption over your lifetime, especially when earnings are low. Following this approach, you should be comparing the lifetime income resources available to you to your lifetime liabilities and adjust your spending so the two are relatively close to each other. This calculator will help you work through the process of determining a “smooth spending rate” for you, based on your estimates of your income over your lifetime.

Debt Consolidation Savings:
Chapter 3, on debt decisions (How Much Debt is Too Much and How Much is Too Little?), identifies the risks, costs and prevalence of “debt diversification.” Are you unwittingly diversifying your debt, along with your assets? Use this calculator to estimate the savings you might gain from concentrating, not diversifying, your existing debt.

Cost of Raising Children:
Even though you learn in Chapter 4 (Are Kids Investments and Can Marriages Diversify?) that children can be viewed as both liabilities and, surprisingly, as assets – nevertheless the costs of raising children are real. Your Money Milestones references estimates of the average cost of raising a child from birth to age 18 in both the U.S. and Canada. If you are planning to have kids or you have a child or children already, what is the cost today of raising the child? Try this calculator and see what you get.

Tax Savings:
The “bottom line” from Chapter 5 (Government Tax Authorities: Partner, Adversary, or Bazaar Merchant?) is to “get tax-savvy.” This chapter reminds us that income taxes can be a large, hidden liability on your personal holistic balance sheet. Which is better – investing in a tax-deferred retirement account with high tax rates at withdrawal, or an account with a low rate of continuous taxation? This calculator allows you to explore which option may work best for you over time.

Chapter 7 (Insurance Salesmen and Warranty Peddlers) describes a new way to think about insurance purchases – and provides some examples of risks you might not want to insure. How are you going to make the decision for yourself about which risks to retain, and which to share with an insurance company? This calculator provides some examples designed to assist you in working out a solution.

Holistic Personal Balance Sheet:
In Chapter 8 (Portfolio Construction: What Asset Class Do You Belong To?), we learned that your financial capital should really be allocated taking your human capital into account. If your labor market income is rigid and stock-like, your allocation will be different than if your income is flexible and bond-like. So what is the right allocation for you? Here’s a calculator which will let you work out the answer to this question for yourself.

Single Premium Income Annuity:
Chapter 9 (Retirement: When is it Time to Shutter the Well and Close the Mine?) discusses the role of pensions as the “ultimate smoothing machine.” Accordingly, if you don’t have a pension plan through your employer, you might want to create your own. Insurance companies have been selling stand-alone pensions for centuries. Are you interested in learning more about how you could create your own pension plan for retirement? This calculator allows you to estimate the payout you would get from a single premium income annuity purchased on the open market – and based on your particular situation.

Research Magazine

Cash-Equivalent Yield of Guaranteed Lifetime Income Benefit (GLIB):
The “Guaranteed” rates on a Guaranteed Lifetime Income Benefit (GLIB) can be confusing. This calculator evaluates how much GLIB guarantees are really worth.

Optimal Product Allocation:
This model optimizes the individual’s retirement portfolio via product allocation to maximize income sustainability while maintaining a minimum 20% financial legacy.

Tax Deferral Benefit:
This calculator evaluates the amount of time it takes for the outcome to be better if the investor chooses a high rate tax-deferred account instead of a low rate continuously-taxed account. The value given is the number of years to reach break-even.

Survival Probability:
The probability of survival is the probability that a person alive today will still be alive after a defined period of time.

QWeMA Algorithms

Lifetime Ruin Probability:
The Lifetime Ruin Probability is the probability that a retiree will deplete his or her retirement account under a fixed-dollar spending strategy.

Expected Discounted Bequest:
The Expected Discounted Bequest (EDB) is a measure of the discounted portfolio amount that is expected to be left over to the individual’s estate at death.

Advanced Life Delayed Annuity (Deferred Pension Annuity Factor):
The Advanced Life Delayed Annuity factor is defined as the dollar amount the annuitant has to pay the insurance company today to receive $1 per year for the rest of the annuitant’s life, starting at the end of a delay period.

Ruin-Contingent Lifetime Annuity (RCLA):
The Ruin-Contingent Lifetime Annuity (RCLA) is similar to a Deferred Pension Annuity Factor, or ALDA (Advanced Life Deferred Annuity), but the annuity starts when the retirement portfolio is depleted.

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