Systems and methods for generating a metric of financial status relative to a financial goal

• US 8,170,943 B2
• Filed: 11/23/2010
• Issued: 05/01/2012
• Est. Priority Date: 01/25/2007
• Status: Active Grant

• Current Assignee: Richard P. Rojeck
• Original Assignee: Richard P. Rojeck
• Inventors: Rojeck, Richard P., Bazan, Carlos
• Primary Examiner(s): Kyle, Charles
• Assistant Examiner(s): Robinson, Kito R
• Application Number:
  US12/953,388
• Publication Number:
  US 20110106682A1
• Time in Patent Office: 525 Days
• Field of Search: 705/36, 705/36.R, 705/35
• US Class Current: 705/36.R
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

The present invention relates to, among other things, systems and methods for generating a metric of an entity'"'"'s financial status relative to a financial goal. In generating the metric, the value of an entity'"'"'s total assets is simulated over time based on data comprising historical rates of returns. In one embodiment, the present invention provides a computer system and method for generating a metric of an individual'"'"'s probable present-day financial status relative to financial independence on a desired future date. In this embodiment, the metric is called a Financial Independence Score. The Financial Independence score is a single number that represents the individual'"'"'s financial status relative to achieving financial independence by a desired date.

Claims

1. system for generating a single numerical score representing a metric of an entity'"'"'s financial status relative to achieving financial independence by a future date, the system comprising:

(a) an input device for inputting entity data, wherein said entity data comprises;

i) a value of the entity'"'"'s current and projected assets and resources;

ii) a value of the entity'"'"'s actual savings;

iii) a future date; and

iv) a desired income of the entity on the future date;

(b) a memory for storing said entity data;

(c) instructions stored in said memory;

(d) an output device; and

(e) a processor for converting said entity data into a metric of the entity'"'"'s financial status relative to the financial goal based on the instructions, wherein the instructions are operable on the processor to cause the system to;

i) calculate a present value of actual capital by calculating and then adding together the values of the entity'"'"'s total current and projected assets simulated over time based on historical rates;

ii) calculate a present value of actual annual savings;

iii) add the present value of the actual capital to the present value of the actual annual savings;

iv) divide the value obtained in step iii) by the present value of required capital to calculate a score, wherein the required capital is calculated by determining a threshold value of capital that will provide a desired income on the future date, adjusting the threshold value for inflation and after determining whether a principal amount will be preserved or consumed beginning at the future date and over the remaining life expectancy; and

v) output the score from the output device;

wherein the score is a single number that represents the entity'"'"'s financial status relative to achieving financial independence by the future date.

2. The system of claim 1, wherein the entity data further comprises a value of the entity'"'"'s current income.

3. The system of claim 1, wherein the entity is an individual and the entity data further comprises a value representing the gender of the individual.

4. The system of claim 1, wherein the instructions are operable on the processor to further cause the system to calculate a required capital.

5. The system of claim 4, wherein the required capital is calculated using a Monte Carlo simulation.

6. The system of claim 4, wherein the probability that the required capital will appreciate to a desired threshold value by the future date of financial independence is at least 75%.

7. A machine for generating a single numerical score representing a metric measuring the present progress of an entity relative to achieving financial independence by a future date, the entity having an actual capital with a present value, the entity having an actual annual savings with a present value, the financial goal being associated with a required capital having a future value on the future date, the machine comprising:

(a) a processor;

(b) a computer-usable medium;

(c) an output device;

(d) a program code stored on the computer-usable medium and operable on the processor to cause the machine to;

i) calculate a present value of actual capital by calculating and then adding together the values of the entity'"'"'s total assets simulated over time based on historical rates;

ii) calculate a present value of actual annual savings;

iii) add the present value of the actual capital to the present value of the actual annual savings;

iv) divide the value obtained in step iii) by the present value of required capital to calculate a score, wherein the required capital is calculated by determining a threshold value of capital that will provide a desired income on the future date, adjusting the threshold value for inflation and after determining whether a principal amount will be preserved or consumed beginning at the future date and over the remaining life expectancy; and

v) output the score from the output device, wherein the score is a single number that represents the entity'"'"'s financial status relative to achieving financial independence by the future date.

8. A method of generating a single numerical score of the financial status of an entity relative to a achieving financial independence by a future date, the entity having an actual capital with a present value, the entity having an actual annual savings with a present value, the financial goal being associated with a required capital having a future value on the future date, the method comprising:

i) calculating via a processor a present value of actual capital by calculating and then adding together the values of the entity'"'"'s total assets simulated over time based on historical rates;

ii) calculating via a processor a present value of actual annual savings;

iii) adding the present value of the actual capital to the present value of the actual annual savings;

iv) dividing the value obtained in step iii) by the present value of required capital to calculate a score, wherein the required capital is calculated by determining a threshold value of capital that will provide a desired income on the future date, adjusting the threshold value for inflation and after determining whether a principal amount will be preserved or consumed beginning at the future date and over the remaining life expectancy; and

v) outputting the score from an output device, wherein the score is a single number that represents the entity'"'"'s financial status relative to achieving financial independence by the future date.