Systems and methods for projecting future values when performing retirement planning

• US 8,332,297 B1
• Filed: 04/01/2008
• Issued: 12/11/2012
• Est. Priority Date: 04/01/2008
• Status: Active Grant

• Current Assignee: United Services Automobile Association
• Original Assignee: United Services Automobile Association
• Inventors: Claus, Christopher W., Alexander, Lisa Cobb, Fulmer, Paul, Wheeler, Laif, Quan, Ivan, Sacco, Jayson, Dempsey, Andrew S., Shutt, Nancy Jane
• Primary Examiner(s): Dass, Harish T
• Application Number:
  US12/060,715
• Time in Patent Office: 1,715 Days
• Field of Search: 705 35- 37, 705/30, 705/4
• US Class Current: 705/36.R
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

Retirement planning for a person is performed. For each of each class of assets, the income, and the expenses of the person, an analysis is employed that produces a probabilistic distribution of possible future values therefor, and based on each produced distribution derives a respective best case future value, a worst case future value, and a median case future value. Each analysis is conducted by compiling a collection of historical values, performing multiple scenarios based on random inputs to calculate expected future values for each of several particular future periods of time, deriving a probabilistic distribution with distribution values relating to projected future value for each period of time, and deriving a best case future value, a worst case future value, and a median case future value from each probabilistic distribution.

Claims

1. A non-transitory computer-readable medium comprising computer-readable instructions, which when executed by a computer processor, provide for asset valuation projection, the computer-readable instructions comprising instructions for:

obtaining income, expenses and assets of a person, and classes that the assets are grouped into;

employing a first analysis that produces a first probabilistic distribution of possible future values for each class of assets for a particular period of time and based on each produced distribution derives for each class of assets a best case future value, a worst case future value, and a median case future value for the class of assets for the particular period of time;

summing each best case future value for each class of assets to calculate a best case future value for the assets of the person for the particular period of time;

summing each worst case future value for each class of assets to calculate a worst case future value for the assets of the person for the particular period of time;

summing each median case future value for each class of assets to calculate a median future value for the assets of the person for the particular period of time;

employing a second analysis that produces a second probabilistic distribution of possible future values for inflation for the particular period of time and based on the produced distribution derives a best case future inflation value, a worst case future inflation value, and a median case future inflation value for the particular period of time;

employing the best case future inflation value to calculate a best case future value for each of the income and the expenses of the person for the particular period of time;

employing the worst case future inflation value to calculate a worst case future value for each of the income and the expenses of the person for the particular period of time;

employing the median case future inflation value to calculate a median case future value for each of the income and the expenses of the person for the particular period of time; and

employing the best case future value for the assets, the worst case future value for the assets, the median case future value for the assets of the person, the best case future value for each of the income and the expenses, the worst case future value for each of the income and the expenses, and the median case future value for each of the income and the expenses of the person to derive best case, worst case, and median case future times of significance to retirement planning for the person.

2. The non-transitory medium of claim 1, further storing instructions for calculating year-over-year percentage change in the future values for each class of assets.

3. The non-transitory medium of claim 1 wherein the analysis is a Monte Carlo analysis.

4. The non-transitory medium of claim 1 wherein the analysis is a computational algorithm which relies on repeated random sampling to compute results.

5. The non-transitory medium of claim 1, wherein the instructions for analysis for each class of assets include instructions for:

compiling a collection of historical values for the class of assets;

performing multiple scenarios based on random inputs to calculate expected future values for the class of assets for each of several particular future periods of time;

deriving a probabilistic distribution with distribution values relating to projected future value for the class of assets for each period of time; and

deriving the best case future value, the worst case future value, and the median case future value from each probabilistic distribution.

6. The non-transitory medium of claim 5, further storing instructions for calculating year-over-year percentage changes for each projected future value.

7. The non-transitory medium of claim 5 wherein each best case future value is derived as a point in the corresponding distribution where 90 percent of the distribution values are lower, each worst case future value is derived as a point in the corresponding distribution where 10 percent of the distribution values are lower, and each median case future value is derived as a point in the corresponding distribution where 50 percent of the distribution values are lower.

8. A non-transitory computer-readable medium comprising computer-readable instructions, which when executed by a computer processor, provide inflation projection, the computer-readable instructions comprising instructions for:

obtaining income, expenses and assets of a person;

employing an analysis that produces a probabilistic distribution of possible future values for inflation for a particular period of time and based on the produced distribution derives a best case future value, a worst case future value, and a median case future value for inflation for the particular period of time;

employing the best case future value for inflation to calculate a best case future value for each of the income and the expenses of the person for the particular period of time;

employing the worst case future value for inflation to calculate a worst case future value for each of the income and the expenses of the person for the particular period of time;

employing the median case future value for inflation to calculate a median case future value for each of the income and the expenses of the person for the particular period of time; and

employing the best case future value for each of the income and the expenses of the person, the worst case future value for each of the income and the expenses of the person, and the median case future value for each of the income and the expenses of the person to derive best case, worst case, and median case future times of significance to retirement planning for the person.

9. The non-transitory medium of claim 8, further storing instructions for calculating year-over-year percentage change in the future values for each class of assets.

10. The non-transitory medium of claim 8 wherein the analysis is a Monte Carlo analysis.

11. The non-transitory medium of claim 8 wherein the analysis is a computational algorithm which relies on repeated random sampling to compute results.

12. The non-transitory medium of claim 8 wherein the instructions for the analysis include instructions for:

compiling a collection of historical values for inflation;

performing multiple scenarios based on random inputs to calculate

expected future values for inflation for each of several particular future periods of time;

deriving a probabilistic distribution with distribution values relating to projected future value for inflation for each period of time; and

deriving the best case future value, the worst case future value, and the median case future value from each probabilistic distribution.

13. The non-transitory medium of claim 12, further storing instructions for calculating year-over-year percentage changes for each projected future value.

14. The non-transitory medium of claim 12 wherein each best case future value is derived as a point in the corresponding distribution where 90 percent of the distribution values are lower, each worst case future value is derived as a point in the corresponding distribution where 10 percent of the distribution values are lower, and each median case future value is derived as a point in the corresponding distribution where 50 percent of the distribution values are lower.

15. A non-transitory computer-readable medium comprising computer-readable instructions, which when executed by a computer processor, provide a financial projection system, the computer-readable instructions comprising instructions for:

obtaining income, expenses and assets of a person, and classes that the assets are grouped into;

employing for each of each class of the assets, the income, and the expenses of the person an analysis that produces a probabilistic distribution of possible future values therefor, and based on each produced distribution derives a respective best case future value, a worst case future value, and a median case future value, each analysis being conducted according to a method comprising;

compiling a collection of historical values;

performing multiple scenarios based on random inputs to calculate expected future values for each of several particular future periods of time;

deriving a probabilistic distribution with distribution values relating to projected future value for each period of time; and

deriving a best case future value, a worst case future value, and a median case future value from each probabilistic distribution;

employing each best case future value to calculate a best case future value for the assets of the person;

employing each worst case future value to calculate a worst case future value for the assets of the person;

employing each median case future value to calculate a median future value for the assets of the person; and

employing the best case future value for the assets, the worst case future value for the assets, and the median case future value for the assets of the person to derive best case, worst case, and median case future times of significance to retirement planning for the person.

16. The non-transitory medium of claim 15, further storing instructions for calculating year-over-year percentage change in the future values for each class of assets.

17. The non-transitory medium of claim 15 wherein the analysis is a Monte Carlo analysis.

18. The non-transitory medium of claim 15 wherein the analysis is a computational algorithm which relies on repeated random sampling to compute results.

19. The non-transitory medium of claim 15, further storing instructions for calculating year-over-year percentage changes for each projected future value.

20. The non-transitory medium of claim 15 wherein each best case future value is derived as a point in the corresponding distribution where 90 percent of the distribution values are lower, each worst case future value is derived as a point in the corresponding distribution where 10 percent of the distribution values are lower, and each median case future value is derived as a point in the corresponding distribution where 50 percent of the distribution values are lower.

21. The non-transitory medium of claim 15 wherein each class of assets includes assets that behave at least somewhat similarly to overall market conditions.