Scalable Capital launches time machine

Ridhima Sharma
clock • 3 min read

Scalable Capital has launched Time Machine, with which people can systematically plan their private retirement savings.

The tool provides answers to the questions of how much money should be paid for retirement today, whether the current savings plan will be sufficient for the desired standard of living in old age, and what real value your own wealth will have after deducting the inflation rate at the beginning of retirement. Thus, investors can make sense of what monthly payoff they can expect in old age. The Time Machine is freely available on the website of Scalable Capital

“For most people, private retirement is a sealed book. Many do not know how much money they have to set aside for their private retirement savings. Others ask us if their current savings plan is sufficient to secure their standard of living in old age. All these questions are answered by our Time Machine. We want to encourage people in a playful way to deal more intensively with their private retirement provision and now to set the right course for later, “said Erik Podzuweit, founder and CEO of Scalable Capital.

Scalable Capital uses the same assumptions as it does for its existing wealth planner to calculate retirement payments and their potential range of variation. In addition, the Time Machine takes into account not only the current age, life expectancy, statutory retirement age and individual risk tolerance of interested retail investors, but also the inflation rate and tax rates on capital gains. These parameters can each be changed by the user to play through different scenarios.

While the tool feeds a complex algorithm with lots of data behind the tool, it’s easy to use for the investor: all he has to do is state his age, sex, initial investment volume, and monthly savings plan. With just one click, he learns in a clear chart, which monthly payments he can expect in retirement, if he wants to use up his previously saved assets in the course of retirement completely. In a future version, the inheritance of assets may also be included in the calculations.

The user can view the future pay-outs not only nominal but also real. This gives him a realistic estimate of the actual purchasing power of his retirement savings. Finally, few people can estimate the effect of an inflation rate of two percent over a period of, for example, 30 years on purchasing power. In addition, Scalable Capital uses a sensitivity analysis to clarify how the monthly pay-outs can turn out in a particularly good and particularly bad capital market scenario.

The tool also helps to find out what the monthly savings plan for a fixed initial investment must be in order to earn a certain monthly income in old age. In turn, when the user sets up their savings plan and desired pay-outs at retirement age, he or she receives the required initial investment.

To make Time Machine’s performance as realistic as possible, risk is the currency with which investors buy returns on the capital market. Therefore, the result differs depending on the risk category. However, unlike the Asset Management Approval Approach – a legal requirement for regulated asset managers – the user can adjust the risk category both down and up in the Time Machine to better assess the impact of risk on the potential return.

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