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Fidelity (new) Income Strategy Evaluator
Old 02-05-2011, 04:21 PM   #1
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Fidelity (new) Income Strategy Evaluator

Rather than hijack Rich_in_Tampa's Vanguard thread, ...

Has anybody used the new Fidelity "Income Strategy Evaluator"? It is similar to, yet somewhat different from, the Fidelity Retirement Income Planner.

Similarities: It has the same info on all your investments that you entered into RIP (including your non-Fidelity accounts), so it knows your ticker symbols and current values. It knows your current asset allocation. It knows your expenses.

Differences: Your expenses are divided by you into "Essential" and "Discretionary". The income from your portfolio must be guaranteed to cover your Essential expenses, so it will suggest annuities (including Social Security) to help cover that. It also assumes a 0% return on your investments used to cover the essential expenses:

The Tool uses two criteria to estimate your income need: essential expenses are matched at an assumed 0% return level, and total expenses (essential and discretionary together) at the 50% confidence level. The matching of essential expenses at an assumed 0% return is intended to help cover your averaged essential expenses independent of market performance.
Your discretionary expenses are covered by your portfolio in the usual way.

A difference from the Vanguard CFP advice is that Fidelity tool explicitly recommends a fixed annuity to make sure your essential expenses are covered. It does not recommend a fixed annuity for 100% of your essential expenses, but only those that can't be covered by SS & no-growth in your portfolio. In this regard, it seems similar to Otar's grey zone.

Anyways, it's a new tool for folks who like these sort of things.
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