PGC Analysis Flashcards
Cumulative lifetime income
Amount of guaranteed income payments for life
What are the 3 sources of cumulative lifetime income?
- Government pension (like social security)
- Corporate pension (a company or school that offers a pension)
- Personal pension (such as a guaranteed income annuity)
What are the assets at the end of a plan?
Fidelity’s estimate as to what’s left over to leave as a legacy under very conservative market conditions
What is the Monte Carlo simulation?
-fidelity doesn’t assume the market is just going to go up
-uses 250 random different simulations based on historical marker performance to come up with this scenario
—> like rolling the dice 250 times
What is the significantly below average market condition?
-with the Monte Carlo simulation take the 90% best returns & throw them out
—>uses the bottom 10% of market conditions
-this is how much you’d have at the end of the plan in the 10% worst conditions
What is the below average market condition?
-with the Monte Carlo simulation take the 75% best returns & throw them out
—>uses the bottom 25% of market conditions
-this is how much you’d have at the end of the plan in the 25% worst conditions
What is the average market condition?
-with the Monte Carlo simulation take the 50% best returns & throw them out
—>uses the bottom 50% of market conditions
-this is how much you’d have at the end of the plan in the 50% worst conditions
What is the red line on the PGC graph?
Essential expenses
What is the black like on the PGC graph?
Adds on discretionary expenses—>brings us to total expenses
(Includes the tax liability for tax expenses, meaning it includes approximately how much you’d have to pay in taxes)
What are the yellow bars on the PGC graph?
Lifetime income (guaranteed income, pensions)
—>fidelity believes all clients should have guaranteed income that covers the essential expenses
What are the blue bars on the PGC graph?
Withdrawals from other accounts listed
