For any projection, AdviceEngine will automatically determine the optimum retirement income through a combination of pension draw-down and Centrelink to ensure the capital lasts until life expectancy. Since many will live past life expectancy, a number of years can also be specified to add to the life expectancy as the target depletion age. This buffer is calculated as 5 years by default.

This optimisation considers the later of the client and partner life expectancies.

The result from running any previous examples includes a summary section above the projection element. This contains all the details about the optimisation performed under optimisedRetirementIncome, including:

• client/lifeExpectancyAge - the life expectancy for the client and partner provided for reference

• optimisedRetirementIncome/retirementIncome - the annual retirement income that can be received to maximise use of the retirement capital, using both pension assets and Centrelink

• optimisedRetirementIncome/retirementCapital - the amount of capital available at retirement date

• optimisedRetirementIncome/capitalDepletionAge/client - the age at which the retirement capital above will be depleted when receiving the retirement income. This will be the life expectancy age plus the number of years buffer. The partner’s age will also be shown in projections for couples.

Response example

To perform a projection where AdviceEngine optimises for a specified retirement income (also inclusive of Centrelink), an additional optimisations/retirementIncome input element can be provided. At it’s most basic, the income can be provided as a combined dollar amount, but can be further customised to draw a Westpac/ASFA retirement standard (ie. modest or comfortable), a specific amount for the client and partner separately or a percentage of their income at retirement.

This example keeps things simple…

• optimisations/retirementIncome/combinedIncome - the target retirement income to achieve combined for both client and partner

• optimisations/retirementIncome/dollarsPercent - indicates that the amount provided is a dollar value rather than a percentage of income at retirement

When this is run, the summary section of the response still shows the optimised scenario to maximise the retirement income along with additional information for this projection where the amount was specified.

• summary/specifiedRetirementIncome/retirementIncome - the retirement income amount requested. As we requested a dollar amount, this reflects the request value.

• summary/specifiedRetirementIncome/retirementCapitalRequired - the amount of retirement capital that would be required to support the requested income. This provides a key input for the shortfall recommendations (discussed below) that provide an indication of what steps would be required to achieve this capital balance and the requested income

• summary/specifiedRetirementIncome/capitalDepletionAge/client - the age for the client and partner when the capital will be depleted if the specified income is received

• summary/shortfall - when there is a shortfall between the retirement income possible and what was requested, this element will contain details of the shortfall along with recommendations on bridging the gap

• summary/shortfall/income - the difference in retirement income between what can be afforded vs what has been requested

• summary/shortfall/capital - the difference in retirement balance needed to support the requested retirement income

• summary/shortfall/recommendations - provides the results of the three types of potential recommendations that are attempted to address the shortfall by:

  • Achieving a higher growth rate

  • Delaying retirement age

  • Making additional contributions

• summary/shortfall/recommendations/growthRate - the growth rate that would need to be achieved to provide the requested retirement income

• summary/shortfall/recommendations/retirementAge - the delayed retirement age for the client and partner that would achieve the requested retirement income

• summary/shortfall/recommendations/contributions - the details of the optimised contributions strategy that would achieve the requested retirement income, including the net income reduction and first year contributions for concessional, non-concessional and co-contribution. If the scenario starts part way through the first year, an additional secondYear element will be includes to show the first full-year values.

Request example

Response example

AdviceEngine can determine the optimum way to maximise contributions and minimise tax. By providing the amount the client is able to reduce their net or gross income by, AdviceEngine will blend concessional and non-concessional contributions to achieve the highest return.

In this example, we have specified in the optimisation/contributions element that the client can afford to pay $1,000 per month from their net income.

• optimisation/contributions/amountToContribute/amount - the dollar or percent amount to contribute

• optimisation/contributions/amountToContribute/dollarsPercent - indicates whether the amount specified is a dollar or percent value

• optimisation/contributions/amountToContribute/netGross - whether the amount specified should be used to reduce the client’s net or gross income

• optimisation/contributions/amountToContribute/frequency - whether the amount specified is a weekly, fortnightly, monthly or annual amount

Whenever an optimisation is run that impacts pre-retirement income or balances, additional details are included in the summary element to highlight the differences between the current projection and the optimised projection for both the client and partner. Details are provided for both firstYear and retirementYear.

• summary/client/firstYear/netIncome - the net income for the first year both before and after the optimisation. In this example, you can see the $1,000 per month ($12,000 per year) net income decrease requested.

• summary/client/firstYear/superannuationBalance - the difference in superannuation balance at the end of the first year. In this example, a $14,537 increase is achieved from the $12,000 net income reduction.

• summary/client/firstYear/superannuationContributions - the difference in superannuation contributions made throughout the first year. This example shows that $3,864 of contributions were made without optimisation and $18,033 were made in the optimised scenario.

• summary/client/retirementYear/superannuationBalance - the retirement superannuation balance before and after optimisation

• summary/client/retirementYear/totalCumulativeIncome - the total income received in pre-retirement phase both before and after optimisation

Request example

Response example

Transition to Retirement strategies can be optimised by AdviceEngine to maximise tax by blending the salary sacrifice and pension drawdown amounts.

In the simplest example shown here, we are optimising a strategy to match the client’s current net income.

• client/optimisation/ttr/targetIncome/matchCurrentIncome - whether the current net income should be matched. If false, the details of the income to provide must be specified.

Similar to the above contributions example, the results will include the same summary element highlighting the key differences between the current and optimised projections.