I would like to see PRC provide the option to analyze and calculate the value of a financial plan based on the probability of living long enough to realize the projected annual income streams and the values for assets, liabilities, and net worth at each year end.
I envision that PRC would allow the user to select among several mortality tables for use in performing the analysis. Mortality tables from Social Security and RP-2014 for white color workers might be used.
PRC would make calculations as it normally does. However, the planning horizon would be set to something like age 120. Mortality tables would be used to adjust the year end values based on the probability of being alive at the end of the planning year to realize the values. For example, someone at age 65 has a high probability of being alive to receive the projected values for Social Security benefits) whereas someone has a significantly lower probability or receiving those benefits at age 100. The goal would be to quantify the probable value of a financial plan at each year end and over the full life of the financial plan. It would provide an alternate tool for making financial decisions based on what is probable rather than what might happen at the extremes.
An example spreadsheet showing how some of the calculations might work can be viewed in the "Pension Option Analysis Spreadsheet" found here:
