What Does Your Funded Ratio Score Mean?

What Does Your Funded Ratio Score Mean?

We are really fond of the Funded Ratio because it allows us to provide a numerical picture of your retirement income plan. In our retirement income optimization process, you are able to create a framework by providing your preferences for your financial objectives and the subsequent ways you want to fund them with essential and discretionary expenses. This is the key to transitioning from investing for accumulation to investing for distributions. In addition, this framework allows you to provide earmarks for needed reserves- your rainy day money. As you saw from our previous article, Understanding the Funded Ratio, a funded ratio of greater than 100% (i.e., 1.0) implies that the present value of your current and future assets is greater than the present value of your current and future liabilities. This is an essential litmus test that helps you determine whether you need to take greater risks with your assets, reduce your current risk levels, amplify your retirement objectives, or better align your retirement expectations. The Funded Ratio is used to determine the present value dollar amounts of your goals, assets, and liabilities and quantifies any gaps between your assets and liabilities by matching your stated preferences with your economic […]

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What Does Your Funded Ratio Score Mean?

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