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Old 04-05-2016, 08:35 PM   #21
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You do have to be a customer; i.e., open an account. HOWEVER, you don't have to fund the account. That's what I did and it has worked fine.
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Old 04-05-2016, 08:38 PM   #22
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If the account can not be added for automatic updates, then manual is the only way to go. You can periodically check to see if FID has added the account (good luck).

Unfortunately, regardless of how accounts are added, if RIP can't figure out the Asset Allocation, there is no way to input what you think the AA is. So that part of the tool is not really useful
I manually update my accounts as I want the tool match my actual AA. I don't find it burdensome to do so.
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Old 04-06-2016, 05:20 AM   #23
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What is this "QLP" and where can I use it ?
Sorry... I mentioned it earlier in the thread and so abbreviated it from there on...
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Quicken Lifetime Planner, found in Quicken Premier desktop software.
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How is QLP, Quicken Lifetime Planner, better than RIP?
It wasn't until the problems with Fidelity RIP I mentioned earlier manifested.
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Fidelity RIP will not let me edit the asset allocation for my company 401k, and it has it wrong.
Otherwise, they are pretty comparable. They both project out year by year. QLP crafts a balance sheet for every year, which I especially like, so you can see how much of your income for that future year comes from which sources. I'll try to craft some screen shots with personal data obscured.
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Old 04-06-2016, 05:38 AM   #24
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I started trying to put together screenshots myself, blanking out personal data, and then I realized - duh - there are screenshots online!

Here's a review Quicken itself:
Quicken 2016 review
With this photo showing the overview of your lifetime plan:
http://dividendlife.com/wordpress/wp...timeGoals2.png

Comparing that image to mine, it should be noted that that image doesn't show that Quicken seamlessly handles self and spouse, not just self. Also, the event list can be quite long, anticipated job changes, retirements, major purchases, sale of second home, etc.

Now click on any one of those bars and you get balance sheet. I couldn't find a clean screen-shot of that, and there's no way to clean up one of mine - practically every bit of it has personal information. But as I indicated above, it shows the year, all the sources of income anticipated (salary, social security and pension benefits, withdrawals from retirement accounts, etc.), a summary of expenses (as detailed as you entered it, adjusted for inflation, with special handling for things like healthcare), taxes, and then a summary of portfolio value at the end of the year.
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Old 04-06-2016, 07:11 AM   #25
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I just started playing around with the Fidelity tool. Is it me or is it as much of a black box as it first appears?

There's not much info about return or inflation assumptions. Assumed spending seems to jump up and down for no known reason. And there's limited ability to customize scenarios.

I understand that returns in the "underperforming" scenario are supposed to fall within the bottom declie of historic averages, but I'd still like to see what specifically Fidelity thinks that means.
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Old 04-06-2016, 07:16 AM   #26
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IIRC, there's a link to a 20 (?) page PDF somewhere which outlined the methodology.
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Old 04-06-2016, 07:59 AM   #27
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IIRC, there's a link to a 20 (?) page PDF somewhere which outlined the methodology.
I saw the methodology. The "Returns" section pretty much says "we use a monte carlo simulation" and then spends a lot of words describing what monte carlo simulations are.

It's hard to get actual numbers out of the model.

So I set up a 100% equity portfolio and tried to run a retirement scenario where income matched expenses (Fidelity added some misc expenses anyway.)

Here's what nominal returns for Domestic Equity look like for the "down" scenario:

Year 1-16%
Year 2-1%
Year 3-3%
Year 40%
Year 55%
Year 61%
Year 70%
Year 811%
Year 96%
Year 100%
Year 118%
Year 124%
Year 1315%
Year 143%
Year 157%
Year 161%

That doesn't look like a terribly stressing stress test to me. Other people may come to other conclusions. But this is the kind of thing I need to know to make sense of the results from any retirement calculator.

Edit to add: Inflation looks like it is fixed at 2.5% annually - also not very stressing.
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Old 04-06-2016, 08:15 AM   #28
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Edit to add: Inflation looks like it is fixed at 2.5% annually - also not very stressing.
FWIW, Fidelity inflates health care expenses separately by 7%, the last time I looked.
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Old 04-06-2016, 08:36 AM   #29
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These are bond returns. Looks like they almost always exceed general inflation of 2.5%.

Year 1-0.6%
Year 22.9%
Year 32.2%
Year 43.3%
Year 55.6%
Year 62.8%
Year 74.9%
Year 82.5%
Year 93.5%
Year 104.8%
Year 113.4%
Year 123.5%
Year 135.1%
Year 142.6%
Year 153.7%
Year 165.6%
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Old 04-06-2016, 06:29 PM   #30
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I saw the methodology. The "Returns" section pretty much says "we use a monte carlo simulation" and then spends a lot of words describing what monte carlo simulations are.

It's hard to get actual numbers out of the model.

So I set up a 100% equity portfolio and tried to run a retirement scenario where income matched expenses (Fidelity added some misc expenses anyway.)

Here's what nominal returns for Domestic Equity look like for the "down" scenario:

Year 1-16%
Year 2-1%
Year 3-3%
Year 40%
Year 55%
Year 61%
Year 70%
Year 811%
Year 96%
Year 100%
Year 118%
Year 124%
Year 1315%
Year 143%
Year 157%
Year 161%

That doesn't look like a terribly stressing stress test to me. Other people may come to other conclusions. But this is the kind of thing I need to know to make sense of the results from any retirement calculator.

Edit to add: Inflation looks like it is fixed at 2.5% annually - also not very stressing.
those early years which determine the shape of the entire retirement look particularly stressing to me with those sequences . the first 5 years shape the retirement and by the 15th year the entire outcome of a 30 year retirement has been decided .

inflation is set to adjust in the calculator and is based on a few different parameters which currently point to 2.50% as the outlook
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Old 04-06-2016, 08:14 PM   #31
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those early years which determine the shape of the entire retirement look particularly stressing to me with those sequences . the first 5 years shape the retirement and by the 15th year the entire outcome of a 30 year retirement has been decided .
That's pretty much my entire point in a nutshell. We need to see what the model is doing so we can form some kind of opinion about what the results actually mean. It'd be nice if Fidelity could make it plain, rather than forcing us to cajole the model into giving up it's secrets.

Regarding Fidelity's one and only "underperforming market" scenario, I don't find a 16% stock market sell-off in year one, followed by a couple flattish years that taken together don't even break into bear market territory all that impressive. Perhaps I'm a bit jaded having already invested through two fiftyish percent market declines in the not so distant past. I don't see why my planning wouldn't include the possibility of a 3rd.

Now having dug through the numbers, I think Fidelity's "underperforming market" scenario is a reasonable enough basecase. I don't consider it a downside case, though. For that I'd actually like to see a severe bear market scenario and probably an inflationary scenario too.

But my point isn't to convince you about what is an ideal market forecast for retirement planning. It's that we need to see how the black box works in order to know whether we agree or disagree with the results its giving us.
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Old 04-07-2016, 02:37 AM   #32
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the size of the drop does not mean much if it is short or happens after an up cycle , a modest drop that goes on for a few years does a lot more harm as well as burning principal up year one .

those who retired in 2008 are no different this many years in then most other average groups . on the other hand the y2k retiree is on track to mimic the 1929 retiree .
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Old 04-07-2016, 04:50 AM   #33
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The new name for the Retirement Income Planner is "The Planning and Guidance Center"
I'm not surprised they changed the name - the original seems like a bit of an inside joke...
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Old 04-07-2016, 07:13 AM   #34
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the size of the drop does not mean much if it is short or happens after an up cycle , a modest drop that goes on for a few years does a lot more harm as well as burning principal up year one .
But who says a big drop has to be followed by a big recovery?

And who says a 100% bond portfolio can sustain a 4% withdrawal for 32 years in their underperforming market scenario? Yup, that's Fidelity. Firecalc, meanwhile, says that same scenario fails 59% of the time. And even Firecalc's data doesn't include many periods where startging real yields were as low as they are now.

So do I think Fidelity is being too optimistic? Yup.

Are you completely free to think it's a rigorous stress test? Yup.

But at least now you have some actual information on which to make that assessment.
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Old 04-07-2016, 07:58 AM   #35
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while firecalc typically uses actual historical data fidelity attempts to find even worse outcomes that are possible then historical so in that regard i find fielity even more conservative then firecalc .

we can all drum up visions in our head of devastating scenario's where nothing works . gold bugs have been doing that for decades .

they all have visions of being last man standing and only gold survives .

but reality is these things just don't play out or have a very very low chance of playing out .

in reality we have had nothing , not even 2000 or 2008 playing out where it even matched 1965/1966 .

could we ? sure but so far through the great depression , high inflation , world wars and the stagnant 2000's we haven't .

regardless of what the numbers look like , taken as a whole they are already based on some pretty nasty outcomes .

i just retired in july and right off the bat rip eliminated 15% of my principal day 1 in its calculations so i am pretty confident in the numbers.

personally i use bob clyatts dynamic system based on each year so this stuff pertaining to a rigid 4% does not concern me as much
as i am dynamic based on what is going on around me .
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Old 04-07-2016, 08:21 AM   #36
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while firecalc typically uses actual historical data fidelity attempts to find even worse outcomes that are possible then historical so in that regard i find fielity even more conservative then firecalc.
Except it doesn't actually do that, even though theoretically it could . . . and probably should given that current asset valuations are higher than those used in Firecalc's history.

So, no. Modeling bottom decile returns doesn't impress me when both equity and bond valuations are well within their top decile ranges. And when taken together, they're completely outside the historic data set. Based on valuations, one might expect bottom decile returns as a base case rather than a worst case.

So yes. I'd like at least the option of some more stressful stress tests. If you're comfortable that a 15% year one decline is as bad a scenario as we're likely to face, than the model works brilliantly for you. I, however, would like more options.
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Old 04-07-2016, 08:26 AM   #37
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doesn't do what ? the rip planner reduced my balance by almost 15% day 1 when worst case was selected . .
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Old 04-07-2016, 08:58 AM   #38
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doesn't do what ? .
It doesn't do this . . .


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while firecalc typically uses actual historical data fidelity attempts to find even worse outcomes that are possible then historical
It doesn't even claim to find worse outcomes than those in the historical record. It claims to model bottom decile results as it's downside case.

For laughs I tried to see what implied PE-10 equity valuations would be under it's average market return scenario. Using a 30-yr period and the sixty year growth rate of S&P 500 earnings of 5.5%, it looks like Fidelity's basecase scenario implies PE-10 values growing to about 46x.
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Old 04-07-2016, 09:57 AM   #39
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while firecalc typically uses actual historical data fidelity attempts to find even worse outcomes that are possible then historical so in that regard i find fielity even more conservative then firecalc .

we can all drum up visions in our head of devastating scenario's where nothing works . gold bugs have been doing that for decades .

they all have visions of being last man standing and only gold survives .

but reality is these things just don't play out or have a very very low chance of playing out .

in reality we have had nothing , not even 2000 or 2008 playing out where it even matched 1965/1966 .

could we ? sure but so far through the great depression , high inflation , world wars and the stagnant 2000's we haven't .

regardless of what the numbers look like , taken as a whole they are already based on some pretty nasty outcomes .

i just retired in july and right off the bat rip eliminated 15% of my principal day 1 in its calculations so i am pretty confident in the numbers.

personally i use bob clyatts dynamic system based on each year so this stuff pertaining to a rigid 4% does not concern me as much
as i am dynamic based on what is going on around me .
This is the problem with any calculator or tool "for education purposes" (as Fidelity reminds us): the precision we're seeking just isn't there. There are too many variables, the biggest being you may well die before any of it matters. We humans seek security/certainty, but we will not find it in any calculator or spreadsheet (although don't tell that to many Bogleheads--they appear ready to defend their spreadsheets to the death in that forum). Calculators/tools are simply data points and nothing more.

I have come to the conclusion all we can do is have some sort of cushion, have a plan b and c, and remain flexible once we retire. I've noticed myself doing the same thing instinctively in retirement as I did before retirement: when I go over budget, I stop spending until it's corrected. It worked for the many decades before retirement and it continues to work now.

In reading Warren Buffet's May 2010 testimony to the FCIC, I was surprised he considered the possibility of financial armageddon in 08 had the government not intervened in the financial crisis. To me, this goes to show if everything goes to hell in a hand basket, all bets are off and it won't matter anyway.
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Old 04-07-2016, 10:10 AM   #40
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In reading Warren Buffet's May 2010 testimony to the FCIC, I was surprised he considered the possibility of financial armageddon at the time had the government not intervened in the 08 financial crisis.
It's actually quite hard to imagine where the bottom would have been had markets been left to freefall.

And it's not at all hard to imagine that the response to a similar financial panic would be much more restrained if it were to happen again today.
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