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Old 01-31-2011, 02:51 PM   #21
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Originally Posted by MasterBlaster View Post
The "Optimal retirement calculator" ie. ORP gives a tax-optimal distribution. Their model for nestegg growth is simple however the calculator is enlightening as to how and where (After tax, before tax, Roth) to take money out of your nestegg first and in what order.

Spend some time with this one - it will give you lots of insight:

Optimal Retirement Calculator and Retirement Decision Support System

Retirement Calculator - Parameter Form

The ORC above is excellent.
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Old 01-31-2011, 04:09 PM   #22
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My personal favorite calculator is this, quoted from Bernstein's The Investor's Manifesto:

When all is said and done, I still know of no better risk analysis tool for retirees under the age of 70 than this simple narrative: At a 2 percent withdrawal rate, your nest egg will survive all but catastrophic institutional and military collapse; at 3 percent, you are probably safe; at 4 percent, you are taking real chances; and at 5 percent and beyond, you should consider annuitizing most, if not all, of your nest egg.
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Old 01-31-2011, 04:38 PM   #23
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A couple posts have said FireCalc doesn't do Monte Carlo. But it has this option on the Investments tab: "A portfolio with random performance, with a mean total portfolio return of % and variability (standard deviation) of %. Assume an inflation rate of %."

Am I mis-interpreting that?
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Old 01-31-2011, 04:49 PM   #24
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I'm most comfortable if I build a calculator myself. The worksheet stuff is simple as long as I stick to a fixed investment return, and that way I know exactly what my income/spending/tax assumptions are.

Then I can compare it to calculators that other people build. For example, run Firecalc with a fixed interest rate to be sure it duplicates my calculations, then switch it to historic or random returns.
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Old 01-31-2011, 05:00 PM   #25
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Which issues do you want to explore? There are all kinds of tools available.... but for different aspects of the retirement planning/modeling puzzle.
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Old 01-31-2011, 05:06 PM   #26
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Originally Posted by Independent View Post
A couple posts have said FireCalc doesn't do Monte Carlo. But it has this option on the Investments tab: "A portfolio with random performance, with a mean total portfolio return of % and variability (standard deviation) of %. Assume an inflation rate of %."

Am I mis-interpreting that?
You are correct.

FIRECalc does have a Monte Carlo option, which was an add-on, not the default methodology for the calculator. FC was designed and programmed based on historical performance and I believe that is where the real value of the program lies. There are many Monte Carlo calculators out there but very few that allow you to test your spending plan against the past 140 years of actual market data.
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Old 01-31-2011, 07:20 PM   #27
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Originally Posted by braumeister View Post
My personal favorite calculator is this, quoted from Bernstein's The Investor's Manifesto:

When all is said and done, I still know of no better risk analysis tool for retirees under the age of 70 than this simple narrative: At a 2 percent withdrawal rate, your nest egg will survive all but catastrophic institutional and military collapse; at 3 percent, you are probably safe; at 4 percent, you are taking real chances; and at 5 percent and beyond, you should consider annuitizing most, if not all, of your nest egg.
Sounds good to me. I suspect that if you go through any number of calculators, and then apply a little conservative fudge factor, you will align pretty closely with Bernstein's comments.


-ERD50
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Old 01-31-2011, 08:07 PM   #28
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I actually like the Quicken planner tool. While it doesn't do Monte Carlo, it does offer a lot of flexibility in adding various one-time and recurring sources of income or expenses, events like the sale of your home, etc. (Son's college, Daughter's wedding, possible inheritance, etc.) I run it with the historical rate of return for my asset allocation from Vanguard's Portfolio Watch (less a provision for adverse performance). It also allows you to do what-if comparisons with two different sets of assumptions and accept the what-if if you like the result.

I then look at variation in investment return through Financial Engines (linked to my Vanguard accounts).
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Old 01-31-2011, 08:21 PM   #29
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I used the various retirement calculators on line to verify my own, homegrown, spreadsheet projection model. I felt reassured when they supported my spreadsheet projections. Now, I'm into my 2nd year of retirement and the projections were valid...in fact...I'm better off than the projections.
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Old 01-31-2011, 08:32 PM   #30
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Fideltiy's Retirement Income Planner is very comprehensive. I have been using it for about 2 years and I update it whenever something changes. I don't think you need a Fidelity account to use it, but I'm not sure. It's certainly easier, with a Fidelity account though. It requires some time and thought. I keep my finances in Quicken - and have for many years - so it was quite easy for me.

Another simple calculator is MoneyChimp - kind of like Firecalc using real market results.
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Old 01-31-2011, 08:42 PM   #31
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The best calculator? I choose the one that says I will succeed
Exactly why I tried so many calculators!!!
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Old 01-31-2011, 08:54 PM   #32
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Fideltiy's Retirement Income Planner is very comprehensive. I have been using it for about 2 years and I update it whenever something changes. I don't think you need a Fidelity account to use it, but I'm not sure. It's certainly easier, with a Fidelity account though. It requires some time and thought. I keep my finances in Quicken - and have for many years - so it was quite easy for me.

Another simple calculator is MoneyChimp - kind of like Firecalc using real market results.
I've used Fidelitys RIP too and still use it even after retirement for changes. I find it accurate and supportive of my spreadsheet model.
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Old 02-01-2011, 10:20 AM   #33
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I built my own because I wanted to do FireCalc runs on all portfolios individually (something Dory mentioned wanting to do in his FireCalc explanation.). I also added the ability to vary my expenses by year for Normal, Frugal, Lavish, Age Adjusted, Health adjusted lifestyles. That way I can analyse the impact of living e.g., a Lavish lifestyle from 60-65, then adjust down to an Age Adjusted lifestyle where travel is less, etc. Then live Normal for 65-75, etc., and look at how each of the portfolios are affected.

I also added the feature of taking withdrawals from the various portfolios by percentage, e.g., year 1,2,3, take 40% taxable, 25% IRA, 25% 401k, 10% cash. Maybe then switch to 50% IRA, 50% Roth, or whatever.

I then run basically FireCalc as 4 (taxable, IRA, 401k, Roth) parts and then sum to get a total FireCalc.

I ran about 10-12 cases doing regression testing and it matches FireCalc within less than 1% and that's expected because FireCalc uses the historical data set published by Shiller.

Since this type of spreadsheet allows each portfolio to individaully calculate "actual" taxes (not just a 15% assumption), it shows clearly the impact of taxation variations amount the various portfolios.

The online portfolio sustainability calculators are a great way for a quick (and dirty) look for the average person who wants a rough estimate. But I think each person's requirements will be slightly different, so an individual spreadsheet gives that flexibility.
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Old 02-01-2011, 06:45 PM   #34
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Fidelity Retirement Income Planner

Thanks for suggesting Fidelity RIP....I just filled it out and liked what I saw. It's one of the better programs that I have tried (as is FireCalc).

I used to have a Fidelity brokerage account, back in the dot.com days, until I lost a bunch of money. Now, most of my investments are at ML.

Now if the market will continue to go up over the next 5 years.
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Old 02-01-2011, 06:56 PM   #35
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I just tried Fidelity's RIP and it looks good also. I noted the need to annuitize 10% of assets... interesting.
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Old 02-02-2011, 09:39 AM   #36
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The best, mine, I have my own spreadsheet that allows me to tailor different scenarios.
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Old 02-02-2011, 09:51 AM   #37
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That's four votes for "the one I built".
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