• RetireGuide™ Methodology

    Last Updated: May 09, 2017 11:38AM EDT

    Methodology Summary

    RetireGuide™, our retirement planning tool, gives unbiased, holistic advice to help you stay on track and achieve your goals. We help you figure out how much you may spend in retirement (your after-tax income from all sources). We tell you how much you need to save, and even which accounts to save in, whether it's (Employer plan, Traditional vs Roth IRA, Taxable). And for more accurate advice, you can easily and securely sync all of your retirement accounts, not just those with Betterment. 

    Download the full RetireGuide™ Methodology here.

  • How will the information I enter into Betterment for advice be used?

    Last Updated: June 16, 2016 10:25AM EDT

    At Betterment, the security of your personal information and assets are our primary concern.  Like all information you give to Betterment, it will be secured and will not be sold, rented, or traded with any third party without your permission.  We will use the information to help you determine how much money you may require to retire, as well as make recommendations on how to invest your money for retirement.  You will always have access to update or clear this information as you would like.

    You can read our full privacy policy here: https://www.betterment.com/security/privacypolicy/

  • About the RetireGuide™ graph

    Last Updated: May 09, 2017 11:39AM EDT
    The RetireGuide™ graph shows your projected potential spending (income) in retirement with our recommended savings and with your current savings, for a conservative and likely market scenario. It assumes returns similar to the Betterment retirement portfolio returns at a moderate risk level for your age and retirement age. To get the most accurate advice through time, you should update manually entered non-Betterment account balances regularly.  Learn more about our recommended allocations
     
    All numbers are shown in today’s dollars, meaning they are adjusted for inflation.  You can change the amount of inflation by clicking Edit Assumptions. 
     
    Our recommended savings number is based on a 60% chance of having enough to support your specified retirement spending at the retirement age you select.  Read more about our savings methodology
     
    The graph shows both a "likely" and "conservative" investment growth outcome.  "Likely" represents a 60% likelihood of the portfolio reaching its goal target, which is more conservative than the average probability.  "Conservative" represents a 97.5% likelihood of the portfolio reaching its goal target, which approximates a cautious "worst case" approach.

    Our withdrawal advice during retirement is designed to preserve your assets in the worst markets.  We assume you make withdrawals in retirement according to our safe withdrawal advice, which uses a 96% chance of success.

     

    Example:

  • In RetireGuide™, my recommended savings number is higher than I expected, why would that be?

    Last Updated: June 16, 2016 10:24AM EDT
    • Your savings recommendation is based on the information about your existing investments and synced external accounts, any manually inputted accounts, your desired level of spending, and our assumptions (which you can control by clicking “Edit Assumptions” from the Projection page of your plan).
    • As a first check, please verify that you have synced or entered all of your retirement accounts retirement.  This should include all of your retirement investments at all firms, for you and your spouse:  IRAs, brokerage / taxable accounts, mutual fund accounts, cash equivalents, and company stock, if they are planned to be used for retirement.
    • If you’ve removed all Social Security benefits (on the Projection page), this can dramatically affect how much you’ll need to save.  
    • Review the assumptions by clicking “Edit Assumptions” from the Projection page of your plan. 
    • Review the spending amount you specified to make sure it’s realistic given your current income and standard of living.  
    • If you recently synced your retirement accounts and got different advice than expected, please read here
  • In RetireGuide™, my recommended savings number is lower than I expected, why would that be?

    Last Updated: June 16, 2016 10:25AM EDT

    Your savings recommendation is based on the information about your existing investments and synced external accounts, your desired level of spending, and our assumptions.  You can adjust all of these.  

    First, review the spending amount you specified (Step 5 of your Profile).  Ensure that it will meet your spending needs and standard of living in retirement, including all necessary expenses, as well as nice-to-haves like travel or hobbies.

    Review the assumptions (in your plan, on the left bar and also when you click “Edit Assumptions”).  Look specifically at the income sources, including Social Security and other sources of income.  These are estimated on an annual basis, and include cost of living adjustments according to the inflation rate (our default rate or your selected rate).

    If you recently synced your retirement accounts and got different advice than expected, please read here.

  • How do I check my RetireGuide™ plan after it is set up?

    Last Updated: June 16, 2016 10:29AM EDT
    The great thing about RetireGuide™ is that it stays with you, and adjusts with your life’s circumstances. 

    Once logged into your account, you can access RetireGuide™ a few ways:
    1. On the Advice tab, select “RetireGuide” from the Goal dropdown.
    2. On the Advice tab, select any goal that is part of your RetireGuide plan, and click “Edit Plan” in the top blue bar.
    3. On the Summary tab, click "Edit Plan" from any goal in your RetireGuide plan.
  • What assumptions do you use in the RetireGuide™ calculations?

    Last Updated: May 09, 2017 11:39AM EDT
    You can read details about our methodology on our RetireGuide™ Methodology page.  You can also edit many of the assumptions yourself from the Projection page of your plan: on the left bar, or click "Edit Assumptions."  These include:
    • Inflation rate
    • Salary growth
    • Longevity for you and your spouse
    • Other income sources
    • Social Security assumptions and benefits (you can indicate how much Social Security you will get, change what age you receive Social Security, and even upload a Social Security data file)
  • How can I adjust the RetireGuide™ Assumptions?

    Last Updated: June 16, 2016 10:25AM EDT
    You can edit the assumptions yourself by clicking “Edit Assumptions” from the Projection page of your plan. Social Security benefits, retirement age, and annual savings can be edited on the left side of the Projection page.
  • Market interest rates are at historic lows right now, how do you account for this?

    Last Updated: March 28, 2017 10:58AM EDT
    All of our projections are based on expected returns for the assumed stock/bond allocation. Returns are modeled as an excess return above the risk free rate curve we assume. Our risk-free rate curve is a forward curve based on the existing Federal Reserve H15 rates. This means our projections assume near-zero risk-free rates currently, but steadily increase to 3% over the next couple years.

    See more details about our Projection Methodology
  • What returns do you assume in your RetireGuide™ calculations?

    Last Updated: May 09, 2017 11:39AM EDT
    Returns follow the same assumptions as outlined in our Projection Methodology for all goal projections.  We assume that all external accounts have the same projected rate of return as your portfolio at Betterment, using the recommended allocation.
  • How do you take taxes into account for the RetireGuide™ calculations?

    Last Updated: May 09, 2017 11:40AM EDT
    Taxes are accounted for in several ways:
    • To estimate your in-retirement spending needs, using your current pre-tax income
    • To deduct taxes paid from pre-tax accounts like Traditional IRAs and taxable accounts (long-term gains rate).
    • Pre-retirement tax rates at the federal and state level are calculated based on your income.  State of residence is based on the address associated with your account.  You can adjust this in your Betterment profile settings.
    • In-retirement tax rates at the federal and state level are calculated based on your specified desired income.  State of residence is based on the address associated with your account, so we assume you pay taxes in retirement in the same state you live in now (unless you tell us otherwise).
    • See more details in our RetireGuide Methodology
  • How do you take inflation into account in the RetireGuide™ calculations?

    Last Updated: June 16, 2016 10:23AM EDT
    We assume a 3% inflation rate to show your retirement income in today’s dollars, based on the long-term average of US inflation.  You can change this by clicking “Edit Assumptions” from the Projection page.
  • Can I have more than one RetireGuide™ plan?

    Last Updated: June 16, 2016 10:29AM EDT
    At this time, you can only have one RetireGuide plan.  You can always try different scenarios, since no changes are made to your actual investments until you make the changes on the Advice tab for your goals.  
  • Can I delete my RetireGuide™ plan?

    Last Updated: June 16, 2016 10:29AM EDT
    RetireGuide can be cleared, disabled or hidden from your account. The setting can be updated from your Account Administration section found here.

    Your status can be set to "Not Active," "Active," or "Hidden." Note that in order to hide RetireGuide, you must first clear it. Once RetireGuide has been hidden, your Summary page will no longer display RetireGuide setup buttons.
  • How can I add other retirement income sources to RetireGuide?

    Last Updated: November 18, 2015 3:41PM EST

    If you have other income sources expected in retirement, such as pension, rental or annuity income, RetireGuide can include them in addition to Social Security and portfolio withdrawals.  After setting up your plan, click "Edit Assumptions", then "About your income", and enter the annual, pre-tax amount under in the other income sources field.

    You can always sync additional retirement savings accounts by visiting your “External Accounts” tab here

  • How do I add an external account?

    Last Updated: February 08, 2017 11:49AM EST

    To sync a non-Betterment account, follow the below steps:

    1. Log in to your Betterment account here 
    2. Click on the "Sync New" button in the bottom right corner.
    3. Follow the instructions to sync.

    4.  
  • How do I delete a synced external firm and its accounts?

    Last Updated: June 15, 2016 11:14AM EDT

    To delete a synced firm: 

    1. Log in to your Betterment account
    2. Select your name at the top right and click “Settings”
    3. Select the tab called “External accounts”
    4. Choose the firm you would like to delete
    5. Select “Delete firm” on the bottom right

    Deleting cannot be undone. If you’d like to see the account again, please sync it.  

    You cannot delete specific accounts within a firm at this time.

  • Is it safe to sync my external accounts to RetireGuide?

    Last Updated: June 15, 2016 11:14AM EDT

    Keeping your data protected and secure is our top priority. Betterment has incorporated bank-level security measures in everything that we do. This includes the strongest available browser encryption, secure servers, and identity verification services, among other precautions.

    For more details, please review the Security & Privacy Promise section of our site.

  • How do I change my Social Security assumptions?

    Last Updated: June 15, 2016 11:13AM EDT

    To change your Social Security assumptions:

    1. Log in to your Betterment account and navigate to your RetireGuide plan 
    2. Click “Edit Assumptions” in the top right. 
    3. Select “About your income” in the left column and you will be able to change your Social Security assumptions and even upload a Social Security data file. 

    You can download your Social Security data file from the Social Security Administration website, as well as see your earnings record.  To learn more about finding and uploading your Social Security data file, click here

  • Is RetireGuide included for all Betterment customers?

    Last Updated: June 15, 2016 11:13AM EDT

    Yes, RetireGuide is included in all Betterment customers. For funded customers, synced retirement accounts will refresh daily--giving you the most accurate advice on your retirement picture. 

    For customers who are not funded and who don’t have free time, synced accounts will not refresh automatically.  Your RetireGuide plan will be based on the last refresh date, or your manually updated balances.  You can always get more free time by referring friends here or you can fund your account now here.  

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