Get your RISE Score for better retirement planning
If you’re trying to figure out your retirement strategy, I know it can feel a little overwhelming trying to account for all the moving parts. One of the biggest questions people have is will I have enough to retire?
I recently discovered a new tool that will help you know how close you are to reaching your retirement goals, and I wanted to share it with you!
It’s called RISE (Retirement Income Security Evaluation), and the tool calculates a RISE score between 0 to 850. This number represents your readiness to retire based on how long your savings will last. According to the website, it’s like a “credit score for retirement”.
What is a RISE Score?
Your RISE score indicates how well your current and future savings will provide a steady income in retirement. This way, you know if there is a gap between what you’ll have and what you’ll need.
With a score that can range from zero to 850, it’s similar to a credit score.
You simply use the RISE online calculator to receive a score based on the information you input. It analyzes your data and evaluates your readiness for retirement.
The tool is provided by the Alliance for Lifetime Income, which is a nonprofit company backed by the financial services industry.
Who is it for?
The tool is aimed at individuals ages 45 and up, with investable assets of $75,000 to $2 million.
How do I use the RISE Score calculator?
First, go to their website to find the RISE Score calculator.
Just complete these 5 sections to get your RISE score:
The first two parts will build a profile that includes your current and expected retirement age, general health condition, and estimated tax rate in retirement.
From there, you choose the level of investment risk you’re comfortable with. You can select conservative, moderate, or aggressive.
After that, you’ll need to input a variety of factors such as:
- Monthly income
- Expected Social Security income
- Any pension income you may have
- The amount of your current savings
- Additional contributions
- Additional sources of income
- Monthly living expenses
- Medical expenses you project
The provider advocates for the consideration of annuities to generate guaranteed income.
So, the final question asks for a percentage of your portfolio you may be interested in allocating to an annuity (from 0-50%). However, you are never directed to any specific investment product.
A recent tax return could be helpful, but you don’t have to have all of these numbers handy. The tool provides you with average estimates that you can use.
What will my RISE score tell me?
After entering all of the requested information, the tool will reveal your RISE score. This number can be anywhere between zero and 850, and will indicate how well you are financially ready for retirement.
The higher your number, the greater your retirement readiness.
The tool will rate your score on a scale from “Very Poor” to “Excellent”, depending on your result.
The nice thing is that you will also get an explanation of your computed score, which is broken down into 5 parts:
- Lifetime Income Solutions: this refers to how your score would change according to the percentage of your portfolio that would be allocated toward annuities. Again, you won’t be steered toward any investment products.
- Income Coverage: this is an estimated percentage of your expenses that should be covered by the total of the income sources you provided.
- Average Return: this is the average return assumed across a range of market scenarios, and is based on the asset allocation entered. There is also a link provided if you want more information about the capital market assumptions that are made.
- Average Inflation: this is the average inflation rate assumed across a range of inflation scenarios.
- Average Life Expectancy: this number is based on an “industry-accepted” mortality table, and estimates (from your information) how long you can expect to live.
Finally, you can print out a PDF of your results for your own records and conversations with a financial advisor.
Here’s how much you should have in savings at every age:
What is a good RISE score?
Much like a credit rating, your RISE score can range from 0-850. So, a higher number indicates a greater ability to fully fund your retirement.
According to their website, these are the following ranges to determine the quality of your score:
- Over 750: Excellent
- 700-749: Very Good
- 650-699: Good
- 550-649: Fair
- 350-549: Poor
- Less than 350: Very Poor
Is it safe to use?
All of the information you provide remains anonymous, so it won’t be shared with other parties!
Why should I use the RISE Score calculator?
The RISE Score calculator is a great tool to get a good grasp of your retirement financial readiness. You can adjust your data to reflect a variety of circumstances to see how it affects your score.
You can print out a hard copy, so it’s a helpful resource to share with your financial advisor.
He or she can clarify and confirm the gaps that your RISE score reveals, and then give you direction to help you work toward closing them before you retire.
On top of all that, it’s FREE!
So, use this tool to give you additional insight into how well you’re doing with your retirement planning. A low score can provide motivation to ramp up your savings, and a higher score can help you know you’re on the right track.