When dealing strictly with retirement issues such as required savings to reach a retirement goal or modeling spending during retirement, a dedicated retirement planning tool can sometimes be a more appropriate tool than a comprehensive financial planning application. There are a number of good worthy contenders in this category, but one of my longtime favorites is Silver Financial Planner from MoneyTree Software in Corvallis, Ore. It has been a number of years since I last looked at Silver Financial Planner in any depth, so the recent release of version 3.0 provided me with a good opportunity to become reacquainted with the program.

Historically, MoneyTree Silver Planner has been a desktop application that is flexible, easy to use and best suited for fairly simple retirement scenarios. According to Jay Levin of Investment Planning Associates in Rockville, Md., "MoneyTree Silver is an excellent program, but only to a certain level of detail." For clients with more complex needs, Levin often starts an analysis with MoneyTree Silver as a "first pass" before he turns to a comprehensive tool such as MoneyTree TOTAL for an in-depth analysis.

Levin uses the desktop version of Silver, but MoneyTree now offers an online version as well. I had not previously reviewed the online version of MoneyTree Silver, so I decided to try it this time around. Both the online version of Silver and the offline (desktop) version cost $495 initially, but the annual licensing fees for the online version run $459 annually, while the offline version costs a mere $150. Although the online version costs more, I think it is worth it because the software is available from anywhere an Internet connection is present, and all of your data is backed up daily and maintained by MoneyTree on secure, quality servers. In addition, the online version includes a client-access portal, so you can make data and reports accessible to clients online should you choose to do so.

Those who want the best of both worlds can purchase the dual license. This allows you to access data both online and offline. With licenses for both versions, you can download a plan to your laptop and take it with you, update the plan during your travels, then upload the revised version back to the online version when you connect to the Internet. A combination license costs $795 initially; that's only $300 more than the online version would cost alone. After the initial year, you pay only $495 for the online license; there is no extra ongoing charge for the offline version if you purchase the combination package. If you can make use of the online/offline capabilities, the combination package appears to be the best deal.

As is the case with most online financial planning applications, getting started is effortless. You navigate to the log-in page and sign in using your user name and password. This takes you to the main program dashboard. The dashboard comprises three sections: clients, settings and administration. You can toggle back and forth between sections using the tabs at the top of the page.

The clients tab is where most of the work takes place, and we'll cover that in a second. The settings tab is where individual users can control things like their profile, password, asset-allocation models, report cover pages, logos and default long-term-care cost assumptions. They can also use it to customize reports  (by either modifying the contents of a default report set or creating a custom set from a combination of default report pages), and they can also modify (edit or delete) items on the budget screen. The administration tab essentially allows the person administering the system to make the same modifications as those on the settings tab, but to apply them to all users in the system. In addition, the administrator can assign roles and permissions to each user.

The clients tab is where you search through existing clients and where you add new ones. To begin a new client case, you simply select "add client," and begin typing in personal information such as names, addresses and employment information.

Once clients are added to the system, a dashboard page is created for them. Here, you can modify client details, update the advisor assigned to the client, create plans for the client, enter notes about the client, import a client file from the desktop version or export a client file to the desktop version.     This is also the place where you can enable client online access to a plan or plans.

If online access is enabled, the advisor creates client passwords and grants permission to various users. In addition, the advisor can control whether the client can only view a plan or make changes to it as well. Advisors also control further steps in the process, such as whether a client is allowed to produce a standard report and whether he or she can print it. The advisor can also set a date when access automatically ends. This is a good idea for a number of reasons. First, it is a good security measure. Second, it is a good compliance safeguard. You may not want clients viewing or printing "stale" data and reports that have not been recently updated.

Entering information into a new plan is simple and straightforward. The first input screen includes basic demographic information such as planned retirement age and life expectancies. The second input screen captures the risk profile. Advisors assign the clients a risk profile either with the help of an included risk tolerance test, or by conducting an evaluation using some alternative methodology.

True estate planning is beyond the scope of this program, but it is noteworthy that Silver includes an "estate" input page. This page serves primarily as a checklist to document whether the client has wills, trusts, powers of attorney, etc. It also documents whether the client lives in a community property state. Finally, it captures some other information the program requires to perform calculations such as intended charitable bequests, credit shelter exclusions that have already been used, etc. Life and LTC information is captured next.

As you would expect, all income, pensions and lump-sum distributions are captured. When dealing with Social Security, the application can automatically calculate a benefit, or you can enter your own estimates. On the expense side of the ledger, you can either just enter annual estimates, or you can drill down using the worksheet provided. For uneven inflows and outflows, such as payments expected in the future, or intermittent expenses (like a new car every four years), there are separate input screens.

Once the income and expenses are in place, the advisor enters assets, asset allocations, and rate assumptions. The program allows the user to specify one rate assumption for each type of asset before and after retirement. For example, you can assume that the client will earn an average rate of 8% on taxable assets before retirement and 7% after. You can also enter average tax rates for pre- and post-retirement, as well as a single assumption about the cost basis for taxable assets and another single assumption for annuity assets. Experienced advisors may want to control the standard deviation assumptions used in the program's Monte Carlo simulation, but most users will allow the application to supply that number.

In my tests, navigation and data entry were simple. A simple case might take as little as 15 minutes to enter, while a more detailed one could take up to 45 minutes. Once all of the data is in place, analysis can begin.

"Silver's 'what-if' screens are fantastic!" according to Levin. "I can create many scenarios quickly." At the top of the screen is a simple graphic analysis determining whether clients will run out of money before death given their projected life expectancies. The graph assumes there will be constant average rates for returns, taxes, inflation, etc. Below the graph is a Monte Carlo probability result-the odds of success if returns are randomized.

In the first scenario I ran for an imaginary couple, both the straight-line calculation and the Monte Carlo simulation indicated that they had little chance of meeting their goal of retiring at ages 68 and 67 with $84,000 in income and $54,000 left to the survivor, given their life expectancies of ages 88 and 92. On the lower half of the page, however, it is easy to change the assumptions and generate almost instantaneous results. When an alternative scenario delayed retirement to ages 70 and 69 and delayed Social Security payments until the same ages, the straight-line calculation indicated success, but the Monte Carlo simulation indicated a success rate of only 46%. I then lowered the income need to $80,000, which boosted the success rate to 60%. Finally, we pushed back retirement one more year, and the Monte Carlo success rate went up to 75%. All of this was accomplished in a couple of minutes.

The latest version of Silver builds on the success of its  "what-if" scenario generator with something new. The folks at MoneyTree call it "dynamic behavioral analysis." In a sense, this is an extension of the thought process behind Monte Carlo simulations. As most readers know, Monte Carlo gained in popularity because market returns vary over time, and the order of returns can have a huge impact on retirement income projections. Monte Carlo simulations illustrate this concept to clients.

By the same token, behavioral factors can also play a role in a retirement income distribution plan. While most retirees have fixed expenses, they also have discretionary ones. After retirement, if a retiree experiences suboptimal returns on their portfolios, it is reasonable to assume that some discretionary spending will be scaled back. Behavioral dynamic analysis can take this behavior into account by creating rules that say if a distribution exceeds a predetermined percentage of the total portfolio, that year's distribution will be scaled back by a percentage not to exceed, for example, 10%.     Obviously, by scaling back spending in lean years, and incorporating this behavior into the analysis, the life of a portfolio can be extended.
Furthermore, many clients have discretion over when they will retire. Rather than run a Monte Carlo simulation where the client supplies a retirement age (say 65) and then solve for the portfolio termination date, doesn't it make more sense to set a termination date, a sustainable rate of return and the asset base necessary to fund such a plan, and then solve for the projected retirement date using Monte Carlo? So, for example, you could say that under a given set of circumstances, if you retire at age 65 your odds of success are 40%, but if you wait until age 68 they improve to 60%. Silver allows you to do this.

Overall, there is a lot to like about Silver. It is fast, intuitive and convenient. The output, while it makes some compromises for the sake of expediency, is meaningful. According to the feedback I've received from a number of MoneyTree clients, both customer service and technical support are well above average.

While it is difficult to judge exactly what the impact of dynamic behavioral analysis will be at this point, it appears that by adding additional variables to the accepted models and by offering different ways of examining the data, MoneyTree Silver adds new perspective and increased flexibility to the income distribution process. That is certainly a step in the right direction.

There are some annoyances, but they are minor. I'd like a little more granular control over tax rates, but that would add complexity and require additional inputs, something many people understandably want to avoid. Right now, if you want to enter multiple assets or asset classes in a 401(k) account, you have to enter each separately. I'd like one screen that allows me to enter the total account balance, and then type in the percentage of each asset class within the account. I'd also like more discretion over what clients can and can't do if you grant them online access. Overall though, the positives far outweigh the negatives.

MoneyTree Silver remains one of the top choices for modular retirement planning. Its speed allows advisors to generate quick, inexpensive retirement projections for those who need them, and it is a great tool for generating discussions about trade-offs and alternative scenarios for clients at all income levels. I experience no problems at all using the online version, but if I were to use Silver on a regular basis, I'd probably opt for the online/offline combination deal. It is well worth the incremental difference in price.