Did you know that increasing your Planning Horizon years in our in Retirement Income solution actually increases the "confidence percentage" of your strategy?
Setting a level of confidence defines how much longevity risk you are willing to buffer for. For a couple, Xplan tracks the probability of at least one person being alive to ensure the strategy remains sustainable throughout both their lifetimes.
How?
- 50% Confidence: This is the statistical midpoint based on average life expectancy - essentially a coin flip on whether the client outlives the strategy.
- 80% Confidence: This pushes the planning horizon further out, providing a more robust buffer against the risk of the client living longer than average.
The default setting is typically 75% to ensure a safe margin for error. If you increase the confidence percentage, the planning horizon date moves further out, which usually makes the "Strategy Score" harder to achieve (since the money has to last longer).
It is a helpful tool for showing clients the trade-off between spending more now and ensuring they have a high degree of certainty that their income will last as long as they do.
