One of the strengths of Personal Capital is retirement planning. They offer a variety of tools that can help you plan out your golden years. Most recently, they’ve introduced a service called Retirement Paycheck.
Retirement Paycheck uses advanced tax forecasting that will allow you to predict and optimize the withdrawal order of your various accounts in retirement. For example, it could help you determine if you should withdraw funds from a taxable investment account ahead of an IRA account. It could be a valuable addition to your retirement planning strategy.
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About Personal Capital
Personal Capital comes in two versions, the free version and Personal Capital Wealth Management.
Anyone can use the Personal Capital free version. It offers a wealth of services that can help you better manage your investing activities. The budgeting feature allows you to track your spending, as well as create income and spending reports. One of the most important features of budgeting is the ability to track your net worth. This is the single most important number in your financial life, and Personal Capital enables you to track it on a regular basis.
The free version also comes with tools like Investment Checkup, that analyzes your portfolio, and recommends strategies to help you reach your investment goals. Then there’s the Fee Analyzer. It analyzes your investment accounts for expenses to breakdown exactly how much you’re paying for that fund. It will even make recommendations on lower cost funds, that will improve your investment performance over the long term.
Personal Capital Wealth Management provides investment management services similar to traditional investment managers, but at only a fraction of the cost. For example, while most investment management services charge anywhere from 1.5% to 3.5% of your portfolio balance, Personal Capital charges just 0.89%, and that’s on balances under $1 million. The fees are even lower on larger portfolios.
Personal Capital Wealth Management operates something like a hybrid between traditional investment managers and robo-advisors. That is, your portfolio will be based on modern portfolio theory and automatically managed, but there will also be human oversight. As well, you will have access to human financial advisors.
Also Read: Do You Need a Financial Advisor?
And of course, as a Personal Capital Wealth Management client, you will also have access to all the tools and services of the free version.
About Personal Capital Retirement Paycheck
Personal Capital Retirement Paycheck is available to clients who are part of Personal Capital Wealth Management. You provide a few financial data points, your expected retirement spending goals, and your state of residence, and Personal Capital will let you know the optimum account sequence to begin taking distributions from during retirement.
This will help you to minimize taxes once you begin taking distributions from your various plans. It helps you to make informed decisions now on how to proceed when the time comes. That is also important for developing strategies involving various accounts that you may need to open and fund now.
Personal Capital Retirement Paycheck maps out your various recommended income sources. This includes expected dividends and any portfolio withdrawals you’ll need to reach your after-tax retirement spending goals. It will show not only the withdrawals, but also provide you with estimates of the taxes that will be due as a result.
Your projected income will be compared to your spending line, and when required minimum distributions begin, the service will layer them on top. It will even advise you if either a Roth conversion or tax gain harvesting will make sense.
A built-in advantage of Personal Capital Retirement Paycheck is the financial aggregator capability. Since all your financial activity will run through the platform, Personal Capital will have an accurate assessment of your spending habits. In that way, the spending projections in retirement will be based on your actual spending history, not vague estimates.
Personal Capital Retirement Planner
Personal Capital Retirement Paycheck is a unique tool among several available through the Retirement Planner.
The Retirement Planner helps you to assess your overall retirement readiness. Using actual financial information from any accounts you’ve linked to Personal Capital, you’ll get a realistic assessment of whether or not you’re ready for retirement.
It even enables you to anticipate big expenses, like planning for college for your children, or buying a new home. You can add these events to the Retirement Planner, and see how they’ll impact your retirement plan.
You can also include outside income sources. For example, the retirement planner automatically calculates your projected Social Security income. But you can add other factors, including pensions, rental income, and other sources of cash flow that will be available in your retirement years.
With the Personal Capital Retirement Planner you can take advantage of a data driven retirement plan built on modeling tools and Monte Carlo simulations of your actual spending and savings habits. They can use various scenarios to predict the most likely financial outcomes, and they’re probability of happening.
Again, the Personal Capital Retirement Paycheck works within the Personal Capital Retirement Planner to provide you with an even more accurate assessment of your cash flow situation in retirement.
What Personal Capital Retirement Paycheck Can Do for You
The ultimate goal of Personal Capital Retirement Paycheck is the help you achieve an optimal mix of income, spending and tax liability on your portfolio over the long term. You’ll be able to see your retirement years ahead of time so you can make any necessary adjustments between now and then.
Most retirement planning services and investment advisors focus attention on accumulating the funds necessary to retire. But Personal Capital Retirement Paycheck takes a more holistic view, including the focus on spending needs and the tax liability you may encounter using a given set of withdrawal priorities.
The strategy focuses on considering the end from the beginning. If you know the mechanics of how much you’ll need to live in retirement, and where those funds will best originate, you’ll be able to make plans today to better achieve the lifestyle you hope to have in your retirement years.
And since Personal Capital Retirement Paycheck is part of Personal Capital Wealth Management, you’ll also have the benefit of working with a personal financial advisor.
Personal Capital Retirement Paycheck Pricing
Since Personal Capital Retirement Paycheck is part of Personal Capital Wealth Management, it’s included in the advisory fee you’ll pay for that service. There is no additional fee for Retirement Paycheck. It just makes Personal Capital Wealth Management that much more attractive as your choice of investment managers.
Should You Sign Up for Personal Capital Retirement Paycheck?
To take advantage of Personal Capital Retirement Paycheck you must participate in Personal Capital Wealth Management. That requires a minimum investment balance of $100,000 in the plan itself. Personal Capital can also help you to manage your other investment accounts, even those they don’t manage directly. But you will need to meet that minimum investment to qualify for the advisory service.
If you’re already a Personal Capital Wealth Management client, the Personal Capital Retirement Paycheck is available to you automatically. But if you aren’t a client, it’s another reason for selecting Personal Capital as your investment manager. The Personal Capital Retirement Paycheck probably comes as close as anything in the world to being a financial crystal ball. It’s the type of service you don’t want to pass up If you’re in a position to take advantage of it.
If you’d like more information, or if you’d like to sign up for the service, check out the Personal Capital Wealth Management webpage, where you’ll be automatically enrolled in Personal Capital Retirement Paycheck.