Finke, Toland to Launch Retirement Income Visualization Platform

Toland echoed that perspective, noting that IncomePath’s visualizations can help an individual see how good or bad luck in the markets — and the use of financial products that transfer risk — could shape their retirement. She stressed that the planning framework is not just about showing clients when they need to limit their spending; it will also show many clients that they could afford to spend more without jeopardizing legacy goals.

“We want to help consumers to make a personal decision about how much lifetime income they want, if any, through a simple planning experience,” Toland said. “We want to move the conversation away from failure rates associated with the hotly debated 4% rule and focus on lifestyles that use more realistic spending that is better suited to match a client’s goals.”

Finke pointed out that the name of the new tool, as well as some of the core thinking behind it’s approach to visualizing different “retirement income outcomes,” actually came from an article he wrote for ThinkAdvisor in 2019 featuring the Nobel Prize-winning economist Bill Sharpe.

“I went to Sharpe’s home for the interview, and he showed me a new program he was working on to simulate variable-annuity income streams,” Finke recalled. “He was using a random return generator and programming based on annuity contract features, and he was simulating what happens to income when market returns rise and fall during retirement. The computer program spit out a series of squiggly lines that represent possible income paths. … I think the term ‘income paths’ appears four or five times in that article.”

What was so eye-opening, Finke said, was to see how the outcome lines were all over the place. Some income paths spike early in retirement and result in a high income that decreases gradually over time with inflation. Some fall flat early in retirement, presumably leaving the simulated retirees with a disappointing lifestyle with fewer vacations and fancy dinners.

“The approach is all about visualizing the trade-offs that all retirees face when turning their nest egg into a lifestyle in retirement,” Finke explained. Everyone wants a high and stable income in retirement, but they can’t have both. “They can either have an income that’s low and stable, or an income that’s risky, unstable and possibly higher.”

Pictured: Michael Finke and Tamiko Toland