Frequently Asked Questions
The purpose of the RISE Score is to provide you with a single, intuitive measure of income security in retirement– essentially a credit score for retirement!
Your RISE Score can help assess how well your retirement portfolio, along with known sources of deferred income, covers basic living expenses and healthcare costs, and demonstrate how savings and investing changes to your portfolio can affect expected retirement income.Your RISE Score is only one piece of information you would need to consider when making changes to your retirement portfolio. There are many other considerations when making these decisions, including but not limited to the actual fund performance of the fund options available in your plan(s), risk tolerance, fees, liquidity preferences, other financial goals not captured, planned retirement age, health status, and more.
The RISE Score is not intended to provide a substitute for comprehensive financial planning, and is not intended to provide financial or investment advice. The RISE Score is intended for informational and educational use only.
Frequently Asked Questions
What information do I need before starting my RISE Score calculation?
If you are married or have a partner and plan to include that person in your planning, you should have the following information available for both you and your spouse/partner.
- Annual compensation
- Social security benefit information
- Possible income from rent, sales or work in retirement
- Recent statements from your savings, investment and retirement accounts, including:
- Personal savings accounts, brokerage accounts, IRAs, 403(b)s and all other accounts that will provide you income in your retirement
- Any pension plan statements in addition to those from your and your spouse’s current employer
- Current rate of contribution (as a percentage of annual compensation) to your employer-provided retirement savings plans
- Current rate of contribution to your other savings, investment and retirement accounts
- An approximate breakdown of your total savings, investment and retirement accounts by asset allocation or strategy.
- An estimate of basic living expenses and healthcare expenses (as separate items)
While estimates of the following information may produce a reasonable guide to your retirement needs and income, having recent actual information available will produce more accurate estimates.
How do you determine if I am on track?
Based on the financial information and assumptions you have provided, the site will run 10,000 – 25,000 market, inflation, and longevity simulations (depending on whether you indicate you are single or have a spouse/partner) to determine if your accumulated wealth together with your pension, Social Security, and other retirement income is likely to generate enough income during retirement to cover your retirement expenses. We then aggregate the results from these simulations and blend the overall average case and average of worst 10% to determine your RISE Score.
If your income produces a RISE Score greater than 650, then you’re on the right track. Otherwise, you may have a more substantial shortfall and should reassess your savings behavior and goals.
What age do I plan to (when should my retirement plan end)?
The calculator uses a range of longevity simulations, so you do not need to provide a specific age to plan to; we consider this for you within the calculation. In general, life expectancy at age 65 for men is approximately 18 years; for women, it is approximately 21 years. Your life expectancy is merely an average length of life. In reality, half of us will live longer, and half of us will die sooner.
The underlying mortality rates are based on those developed for the Society of Actuaries Longevity Illustrator, which presently assumes the 2010 Social Security mortality table, along with the MP- 2016 mortality improvement rates published by the Society of Actuaries. However, we have updated the base mortality table to be the 2016 Social Security Mortality table. More information on the Society of Actuaries Longevity Illustrator is available here:
What accounts should I include?
You should include all accounts you expect to use to provide retirement income. This might include checking and savings accounts, brokerage accounts, IRAs, 401(k)s, 403(b)s, and employer-provided savings accounts.
Your current accounts fill the gap between your needs and your pension, Social Security and other retirement income you expect to receive over your expected lifetime. The calculation assumes all your projected savings will be spent by the end of your expected lifetime along each of the longevity simulations modeled in the system. If you indicate that you are married, you provide the planning date for both individuals and savings are projected to be spent until the oldest living life expectancy.
Desired bequest is not directly considered in the RISE Score calculation. If you wish to leave a substantial bequest then consider increasing your savings and/or include this as an expense.
Does the calculation take into account legal limits on the amount of benefits or contributions to my retirement plans?
Yes, the calculation reflects legal limits on your benefits and contributions. We will incorporate the appropriate IRS contribution and compensation limits on each account when running the retirement projections. These IRS contribution and compensation limits are expected to change over time, as they have in the past, and are therefore projected to increase with inflation (but never decrease). If these limits do not increase over time, as they have in the past, then the projections may overstate the amount of potential qualified savings allowable. These limits may also actually increase faster than the rate of inflation or at some rate different from what was assumed in our simulation set, which would also produce a different level of potential qualified savings allowable.
The legal limits are applied on an approximate basis only. The RISE Score is not intended to be used for providing tax advice or compliance information.
The RISE Score model also adjusts expenses and income in retirement along each longevity simulation in retirement for you and your spouse/partner. For joint profiles, upon death along a particular longevity simulation of either you or your spouse/partner, any assets belonging to the “deceased” are transferred to the “living” profile. Any joint income or expenses are reduced by a beneficiary ratio when either the primary or secondary “dies” along a longevity simulation.
How do I choose my Investment Strategy?
The RISE Score calculation uses stochastic market and inflation simulations to model both pre-retirement and post-retirement returns you specify in the inputs.
What is the basis for the Social Security benefit shown?
Your Social Security benefit is estimated beginning with your current pay and projecting both forward and backward to estimate a full career of earnings history. The site assumes that you have been, or will be, employed in a job covered by Social Security for the full 35 years used to calculate the benefit level. If this is not the case because you were not working in all years or worked in a non-covered job such as certain government jobs, you are allowed to input your own “projected” or “assumed” Social Security benefit. You may also exclude social security. The Retirement Income page allows you to exclude or modify your Social Security benefit.
The Social Security Administration prepares annual benefit estimates, or you can enter your earnings history into our benefit calculators to get a more precise estimate.
If you have included a spouse/partner in your RISE Score calculation, the Social Security benefit will be estimated in a similar way using his/her income, current age, and Social Security start age. You will have the option to modify or exclude this benefit.
If my plan offers a pension, how is my pension benefit determined?
If available, the site estimates your pension benefit using the formula specified in your plan. Some plans express the benefit as a monthly pension. Some plans express the benefit as an account balance that the calculator converts to a monthly pension. If your retirement date is earlier than normal retirement (the age you can retire and begin receiving unreduced benefits), the calculator adjusts the pension for early retirement as provided in your plan. If you request that pension payments continue to your spouse after your death (a joint and survivor annuity), the pension payments are also adjusted as provided by your plan for the cost of this protection.
The site assumes continuous employment up to retirement, with a full year of service credit each year. If your work pattern or work history is very unusual, the estimate of your pension benefit produced may vary significantly from the actual benefit you ultimately receive from the plan.
The site produces an estimate of your benefits and uses approximations. Your actual benefit at retirement will be calculated based on the exact provisions of your plan, your credited service and compensation history. If you are nearing retirement, you may request a pension estimate from your employer.
In order to produce a steady stream of income that grows with inflation during retirement, there may be cases where only a portion of the pension income is used, so the amount on the Income over Time graph will be less than the actual benefit amount. In such cases, the unused portion will either be “saved” and used in the future, which will show up as a withdrawal in later years of retirement, or it won’t get used at all.
How are cost-of-living increases reflected in my retirement income?
Your Social Security benefits are projected to increase with inflation. Your pension, if applicable, is notprojected to increase. Annuity or Other Income are up to you – turn on the “Inflation Adjusted” option for these types of income if you want the income to increase with inflation.
The RISE Score calculation uses withdrawals from your savings balances to cover the remainder of your retirement needs. As your needs increase with inflation, the amount of your savings allocated to provide income also increases. In this way, the calculator shows how your projected savings plus employer pension plans, Social Security, and other retirement income can provide retirement income that increases as your needs increase.
If you enter spouse or partner salary information, that salary amount is also included in the goal computation with allowances made for the possible timing differences brought about by different ages and retirement ages for the spouse/partners.
Why does Milliman use 80% for an estimated replacement ratio?
A Replacement Ratio is a person’s gross income after retirement, divided by his or her gross income before retirement. For example, assume someone earns $60,000 per year before retirement. Further, assume he or she retires and receives $45,000 of Social Security and other retirement income. This person’s replacement ratio is 75 percent ($45,000/$60,000).
Generally, a person needs less gross income after retiring, primarily due to four factors:
- Income taxes go down after retirement. This is because extra deductions are available for those over age 65, and taxable income usually decreases at retirement.
- Social Security taxes (FICA deductions from wages) end completely at retirement.
- Social Security benefits are partially or fully tax-free. This reduces taxable income and, therefore, the amount of income needed to pay taxes.
- Saving for retirement is no longer needed.
Milliman uses 80% as a generally accepted replacement ratio, but this is just a starting point and is no substitute for a thorough analysis of what you think your expenses in retirement will look like. Theriesescore.com will soon have a fully featured budgeting tool to help with this.
Can I set my own estimate of my needs?
Yes. The calculator allows you to override our estimate with your own needs estimate. You can set your own needs percentage on the Retirement Expenses page. You may want to use your own estimate of needs if you expect much lower or higher income needs than are shown in the calculator. Note that if you use this override, the calculator will calculate your needs as that percentage multiplied by your compensation immediately before retirement. An estimate for expected medical expenses has also been provided in the calculator inputs, but can be adjusted if you wish.
How does Milliman estimate medical expenses?
Milliman produces estimates of retiree health costs that are updated each year. These estimates were developed for the purpose of educating employees and retirees about the potential cost of retiree health care.
The estimated 2019 annual premium plus out-of-pocket cost for a healthy 65-year-old is $5,000, assumed to grow with the medical inflation simulations each year into the future, based on the following assumptions:
- A male or female age 65 with average retiree health status. The average is based on a typical commercially insured population based in the Milliman Health Cost Guidelines.
- The 2019 nationwide average premiums and out-of-pocket expenses at age 65 for a Medicare Supplement Plan G and a standard Medicare Part D plan are used, based on the Milliman Health Cost GuidelinesTM and premium information obtained from CMS.
For ages younger than 65, this $5,000 estimate is assumed to grow to retirement age based on the medical inflation simulations and thereafter.
How are cost-of-living increases reflected in my needs?
The calculator will increase your needs with inflation as part of the simulations. There are different inflation simulations for medical and non-medical expenses, as well as an overall inflation simulation set for costof living adjustments (COLAs) for any inflation adjusted income (such as, social security or a pension with a COLA).
What are some of the key assumptions used to calculate my RISE Score?
The RISE Score calculation uses the following basic assumptions and methods.
- Your retirement income needs can be estimated from your projected compensation and national average research on needs.
- You are covered by Social Security and 100% of the Social Security benefit (based on current law) is available when you retire.
- Your effective tax rate is estimated as a function of state of residence and sources of income (e.g. social security is taxed differently than withdrawals). Expenses are then divided by the tax rate in each projection to make sure this financial obligation is included when examining income coverage.
- Knowledge of past investment performance over long periods is useful in planning for the future. Historical market returns are provided to show you the history of market fluctuations based on a given investment allocation of stocks/bonds and cash.
- Your actual lifetime is not known, however, the calculator uses a distribution of life expectancies given your current age and retirement age to project your retirement portfolio over a number of longevity simulations.
The calculator’s target asset mixes use the following asset allocations:
|Target Asset Mix|
|Very Conservative||Conservative||Moderately Conservative||Moderate||Moderately Aggressive||Aggressive||Very Aggressive|
|U.S. Bonds and Cash|
|U.S. Large Cap|
|U.S. Small/Mid Cap|
|Developed International Equities|
How are historical returns used in the RISE Score calculation?
The historical returns shown used for your RISE Score are based on index data detailed below. This data is purely informational.
|U.S Bonds||Bloomberg Barclays US Aggregate Bond Index|
|U.S. Large Cap||S&P 500 Total Return Index|
|U.S. Small/Mid Cap||50/50 blend of the S&P 400 and S&P 600 Total Return Indexes|
|Developed International Equities||MSCI EAFE Total Return Index|
|Emerging Markets||MSCI EM Total Return Index|
Assumed future returns are based on Milliman’s proprietary Capital Market Assumptions for the following asset classes. The 50-year average mean returns of the simulation set underlying the RISE Score model as of July 31, 2019 for these asset classes and inflation rates are as follows:
|Asset Class||Average Return||Standard Deviation|
|U.S. Large Cap|
|U.S. Small/Mid Cap|
|Developed International Equities|
|Inflation Type||Average Rate||Standard Deviation|
The system will use these market simulated returns along with the asset mix you select to project a balance value at retirement for each simulation. Similarly, the system will use the inflation rates applied to your income and expenses based on the information you provided.
Is the information I enter protected?
The data you enter into the system for purposes of your RISE Score calculation is your personal information. Personally Identifiable Information (PII) is purposely limited – the RISE Score does not need it. Any personal data entered into the site for the purpose of your RISE Score calculation is both encrypted in transit (using SSL) and encrypted at rest. Your email address and a password is required in order to access your records. By using the RISE Score calculator you consent to such use by Milliman for the purpose of providing you access to the calculator.
How do you calculate my projected retirement income and wealth values?
Your retirement income and wealth values are estimated using the sophisticated modeling underpinning the RISE Score. This modeling includes a number of key features:
- A proprietary stochastic simulation generator, which models interest rates, inflation, equities, and fixed income returns holistically using Milliman’s own capital market assumptions and modeling methodology for each asset class. Each simulation represents a projected future path.
- The stochastic simulation generator also incorporates stochastic inflation, rather than a single deterministic inflation rate. Projected medical and non-medical inflation is more realistic when generated stochastically, rather than deterministically, such that inflation will not unreasonably be over or under representative in any given simulation along a future path. It is projected in concert with other asset class returns.
- A distribution of longevity simulations are used, rather than a single age representing death/end of retirement, for longevity.
- A sophisticated dynamic withdrawal algorithm to determine the amount a retiree would actually withdraw, each year, from their portfolio. Considerations include age at the time of withdrawal, the level of their current portfolio, recent market performance, inflation, and expected future expenses. This process is designed to reflect how a retiree would typically conserve savings during retirement. In other words, they may not always withdraw the maximum amount needed to cover expenses in a given year if it meant they would not have enough to cover expenses in the future.
Once you select the Investment Strategy for your accounts, the system then estimates how much wealth this portfolio and your current portfolio will accumulate from now until your retirement date by running through the model components described above. Along each longevity simulation, there is a simulation step which uses 1,000 wealth projections (incorporating market returns on assets and inflation on expenses and any inflation adjusted income), each being a real life projection that considers your balance and savings levels, the randomness of the economy, the markets, and the inter-related behavior of the various different types of investments. Each of these simulation steps is then run through a number of longevity simulations (a representative distribution of you and your spouse/partners lifetime) to develop the final projections; in total the projections are run through 10,000 - 25,000 different investment return, inflation, and longevity simulations.
The engine will use the balance at retirement and “search” for the TOTAL income that can be generated from all retirement income sources (plan savings withdrawal, social security, pension and other retirement income). The goal is to find a value that will produce a steady income stream (from all sources) that grows with inflation over time to cover expenses in retirement. The amount a participant can withdraw from the plan savings each year will be based on a dynamic withdrawal, where a 100% dynamic withdrawal adjustment results in a withdrawal equal to the total target income – social security – pension – other retirement income for that year. The dynamic withdrawal adjustment will be less than 100% where there are market downturns along a specific simulation path to mimic savings conservation (i.e. to ensure that the portfolio will provide a steady income stream over a lifetime by reducing expenditures in fewer years).
What can I do if I am not on track?
If your RISE Score indicates that you are not on track, you can run your results again to explore other retirement strategies, such as those with a different contribution rate, investment strategy and/or retirement age. If you are not able to find a realistic strategy that puts you on track, you may need the assistance of a financial advisor.
What if I include a spouse/partner that is a different age or retires at a different time? What retirement age does the calculator use?
When presenting results such as projected income or wealth, the calculator uses the values associated with the later of the two retirement dates. This means if your spouse/partner retires after you, the system will show projected income and wealth values based on his/her retirement age. The calculator will still consider your retirement age in the overall projections to determine things like your income right before retirement or when contributions stop.
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The products or services described or referenced herein may not be suitable or appropriate for the recipient. Many of the products and services described or referenced herein involve significant risks, and the recipient should not make any decision or enter into any transaction unless the recipient has fully understood all such risks and has independently determined that such decisions or transactions are appropriate for the recipient. Investment involves risks. Any discussion of risks contained herein with respect to any product or service should not be considered to be a disclosure of all risks or a complete discussion of the risks involved.
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