Financial Advice for People Who Aren’t Rich
By Ron Lieber
Betterment, which builds and manages investment portfolios of index and exchange-traded funds, realized that 20 percent of its assets were from customers over the age of 50. They were asking for advice on withdrawing their retirement money, and the company is now introducing a service to assist them.
Betterment’s new feature feeds a similar need for additional advice. Jon Stein, the company’s 34-year-old founder and chief executive, built a product that he wanted to use. But then he started hearing from customers decades older who needed help taking money out as opposed to putting money away.
To assist them, the company created a feature that calculates (and can automatically distribute) a safe monthly withdrawal. You tell it how long you expect to live and your risk tolerance, though the tool’s default assumptions are that you will last until 90, that you want a 99 percent chance of not outliving your money and that inflation will run at a 3 percent annual clip. Then it provides a suggested monthly check that comes from a single Betterment account.