Methodology and Assumptions:
FOR LICENSED FINANCIAL PROFESSIONAL USE ONLY. FOR EDUCATIONAL USE ONLY. FOR PURPOSES OF THE TOOL, “THE INVESTOR” OR “YOUR CLIENT” IS MEANT TO REPRESENT A HYPOTHETICAL CLIENT.
Model Portfolios:
The iRetire tool (the “tool”) includes illustrative BlackRock Target Allocation ETF Model Portfolios (“BlackRock Model Portfolios”) with a range of risk levels to select from. The BlackRock Model Portfolios reflect the types of core equity and fixed income exposures that are commonly included within diversified portfolios. The universe of investments available in the BlackRock Model Portfolios is limited to iShares exchange-traded funds (“ETFs”). This information is intended to provide potential investment options, but is not comprehensive investment advice. An investor’s retirement needs may be influenced by a variety of factors that are not included in this analysis. Investors should consult with their financial professionals to help evaluate their retirement needs and consider the information provided by the tool. Other investments not available in the tool may have characteristics similar or superior to those that are included.
Risk Analytics:
For purposes of determining the risk characteristics of the BlackRock Model Portfolios, BlackRock analyzes each model portfolio’s underlying holdings. Neither BlackRock nor the Aladdin portfolio risk model can predict a model portfolio's risk of loss due to, among other things, changing market conditions or other unanticipated circumstances. BlackRock’s Aladdin portfolio risk model is based purely on assumptions using available data and any of its predictions are subject to change. Model portfolio inputs are typically based on the latest disclosed data, which may be lagged.
With respect to the annuity-based analysis performed by the tool, BlackRock does not evaluate the risk characteristics of any available investment options or corresponding underlying holdings in relation to any Nationwide variable annuity. Rather, the tool includes the guaranteed lifetime withdrawals generated from the selected amount allocated to the Nationwide Lifetime Income Rider®, an optional living benefit rider available for an additional cost with certain Nationwide variable annuities (“Nationwide L.incSM”), as described in the Estimated Annual Retirement Income Range discussion below.
Estimated Annual Retirement Income Range:
The tool takes into account each user’s inputs, including the investor’s current age, retirement savings, anticipated retirement age, desired retirement income, risk level and selected amount allocated to a Nationwide L.inc. rider. The estimated annual retirement income range represents a projected range of annual retirement income derived by first growing the investor’s current retirement savings (less any amount allocated to a Nationwide L.inc rider) and additional annual savings from now until the investor’s anticipated retirement age by the assumed return of the selected BlackRock Model Portfolio. In order to estimate a BlackRock Model Portfolio’s assumed return, BlackRock proxies each underlying fund with a market index (or blend of indexes) that is selected by BlackRock based on the fund’s Morningstar Category. All funds in any given Morningstar Category are represented by the same market index. BlackRock’s Long-term Capital Market Assumptions are then applied to the market indexes to calculate the BlackRock Model Portfolio’s assumed return. Please refer to the Long-term Capital Market Assumptions discussion below for the assumed return and assumed risk figures for a set of sample indexes that are broadly representative of the market. The BlackRock Model Portfolio’s assumed return is adjusted to account for the underlying funds’ current net expense ratios and a hypothetical annual investment advisory fee of 3%, deducted monthly.
Next, the investor’s projected BlackRock Model Portfolio balance at retirement is divided by the corresponding projected CoRI value in order to calculate an average estimated annual retirement income. See the next paragraph for information on a user’s ability to select a custom withdrawal rate provided by Nationwide. The low and high estimates reflect the assumed volatility (risk) of the components of the BlackRock Model Portfolio, as well as the assumed volatility (risk) of lifetime retirement income costs as measured by BlackRock’s CoRI methodology. CoRI values are updated daily, so results may vary with each use and over time. CoRI values and BlackRock's CoRI methodology are designed to help estimate today's cost of generating each dollar of future annual lifetime income in retirement, and take into account current interest rates, inflation expectations, life expectancy and other factors. Such estimates are not guaranteed. A number of factors may contribute to variations in retirement income. For example, the CoRI methodology does not reflect the fees, expenses and cost that may be associated with an annuity or any other retirement income product that an individual may purchase, nor does it reflect any assumption that such a product will be available for purchase at the time of retirement.
A user has the option to substitute BlackRock’s CoRI methodology with an assumed “custom withdrawal rate” for the selected BlackRock Model Portfolio. If a user selects a custom withdrawal rate, the low and high retirement income estimates reflect the assumed volatility (risk) of the components of the BlackRock Model Portfolio, as well as the assumed volatility (risk) of lifetime retirement income costs as measured by the custom withdrawal rate. The custom withdrawal rate available in the tool is provided to BlackRock by Nationwide. Nationwide, in its sole discretion, has selected the custom withdrawal rate. The custom withdrawal rate is selected for the educational purpose of this tool only. Neither BlackRock nor Nationwide is recommending or suggesting, directly or indirectly, that an investor should utilize the custom withdrawal rate. Such estimates are not guaranteed. Nationwide may update the custom withdrawal rate periodically, so estimates generated by the tool may vary over time. A number of factors may contribute to variations in retirement income. BlackRock is not responsible for the accuracy of Nationwide’s assumptions or methodology with regard to the custom withdrawal rate.
These annual retirement income estimates are generated using a statistical modeling technique that forecasts a set of potential future outcomes based on the variability or randomness associated with historical occurrences. These estimates are projections based on the probability or likelihood of generating a particular level of retirement income. These figures include a range of the estimated average annual retirement income, showing a low and high value at a 68% confidence level. This reflects a 68% probability that an investor's estimated annual retirement income will fall within the range shown. Projections are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. No representation is made that an investor will achieve results similar to those shown. Actual retirement income could be higher or lower based upon a number of factors and circumstances not addressed herein.
Once the investor’s low, average and high annual retirement income estimates associated with the applicable BlackRock Model Portfolio allocation are calculated, the investor’s Nationwide L.inc Rider withdrawal amount (the minimum guaranteed annual lifetime income withdrawal that a selected amount allocated to Nationwide L.inc Rider could provide) and additional anticipated annual retirement income from other sources are then added to each estimate. Calculation of Nationwide L.inc Rider withdrawal amount is performed by BlackRock using product specifications provided by Nationwide and does not use statistical modeling techniques. BlackRock is not responsible for the accuracy of Nationwide’s product specifications. More information regarding Nationwide L.inc product details, including premiums, withdrawals, growth percentages and living benefit fees can be obtained in the applicable product brochures, accompanying illustrations, and the prospectus provided by Nationwide. Investors should consult with their financial professionals on whether the amount allocated to the variable annuity is suitable for them, and if they included the appropriate amount of retirement income from other sources.
Long-term Capital Market Assumptions (31 December 2023):
Long-term capital market assumptions refer to BlackRock's return, risk and correlation expectations for each market index. (Correlation measures how asset classes move in relation to each other). These assumptions are based on historical asset class returns (as reflected by certain indices), proprietary models, BlackRock's subjective assessment of the current market environment and forecasts as to the likelihood of future events.
|
|
Index |
Annualized |
Annualized |
|
|
MSCI USA Index |
5.56% | 17.36% |
|
|
MSCI World ex USA Index (unhedged) |
8.31% | 17.04% |
|
|
Bloomberg Barclays U.S. Government Index |
3.49% | 4.92% |
|
|
Bloomberg Barclays Global Aggregate Treasury Index ex U.S. (unhedged) |
3.98% | 7.85% |
|
|
Bloomberg Barclays U.S. Credit Index |
4.11% | 5.93% |
BlackRock typically reviews the assumptions quarterly. Actual calculations may include more recent risk and return information. Long-term capital markets assumptions are subject to high levels of uncertainty regarding future economic and market factors that may affect actual future performance. There is no guarantee that the capital market assumptions will be achieved, and actual returns could be significantly higher or lower than those shown. Capital market assumptions should not be relied on as a forecast or prediction of future events, and they should not be construed as guarantees as to returns that may be realized in the future from any investment described herein. Ultimately, the value of these assumptions is not in their accuracy as estimates of future returns, but in their ability to capture relevant relationships and changes in those relationships as a function of economic and market influences.
Because of the inherent limitations associated with the use of illustrative asset allocations based on capital markets assumptions, investors should not rely exclusively on the asset allocations shown in the tool when making an investment decision. The illustrative asset allocations cannot account for the impact that economic, market, and other factors may have on an actual investment. Unlike actual investments, the asset allocations shown in the tool do not reflect actual trading, liquidity constraints, all applicable fees and expenses, taxes, and other factors that could impact an investor’s realized future returns.
Past performance is no guarantee of future results. Indexes are unmanaged and one cannot invest directly in an index.
Asset allocation and diversification strategies do not guarantee a profit and may not protect against loss. The two main risks related to fixed-income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. Non-investment-grade debt securities (high-yield/junk bonds) may be subject to greater market fluctuations, risk of default or loss of income and principal than higher-rated securities. An investment in any fund identified in the tool is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency and their return and yield will fluctuate with market conditions. International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. These risks often are heightened for investments in emerging/developing markets or in concentrations of single countries. Small-capitalization companies may be less stable and more susceptible to adverse developments, and their securities may be more volatile and less liquid than larger capitalization companies. Investments that are concentrated in specific industries, sectors, markets or asset classes may underperform or be more volatile than other industries, sectors, markets or asset classes and the general securities market.