Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Re: Financial Engines feedback
Old 11-12-2006, 01:01 PM   #21
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,951
Re: Financial Engines feedback

Quote:
Originally Posted by Old Army Guy
Financial Engine $14.95 a quarter.

Site: https://www.financialengines.com/FeC...&act=abtprsr12
Hmmmm....the press release in the link is dated June 14, 1999.
__________________

__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Financial Engines feedback
Old 11-12-2006, 04:47 PM   #22
Thinks s/he gets paid by the post
OAG's Avatar
 
Join Date: Jun 2006
Location: Central, Ohio, USA
Posts: 2,598
Re: Financial Engines feedback

Sorry about that, should have read it closer. : At least it was cheap once upon a time!
__________________

__________________
Vietnam Veteran, CW4 USA, Retired 1979
OAG is offline   Reply With Quote
Re: Financial Engines feedback
Old 11-13-2006, 10:58 AM   #23
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,617
Re: Financial Engines feedback

Quote:
Originally Posted by Corporateburnout
Apparently I am grandfathered into an old plan that they no longer offer. I have been using FE basic for a few years now.
They were giving it away for free in the late '90s and my account is still active.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: Financial Engines feedback
Old 11-14-2006, 07:07 AM   #24
Recycles dryer sheets
 
Join Date: Feb 2005
Posts: 166
Re: Financial Engines feedback

Does anyone know how FE calculates retirement income? How does the portfolio advice change after retirement?
__________________
treypar is offline   Reply With Quote
Re: Financial Engines feedback
Old 11-14-2006, 07:57 AM   #25
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,117
Re: Financial Engines feedback

Quote:
Originally Posted by atla
Does anyone know how FE calculates retirement income? How does the portfolio advice change after retirement?
It's been a while since I used FE, but at the time the calculations were based on annuitizing your entire portfolio at the time of retirement.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Re: Financial Engines feedback
Old 11-14-2006, 11:07 AM   #26
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,617
Re: Financial Engines feedback

Quote:
Originally Posted by atla
Does anyone know how FE calculates retirement income? How does the portfolio advice change after retirement?
What REW said. You can mess around with tax rates & inflation rates before/after retirement but here's no provision for actually changing the portfolio after retirement. You can adjust retirement spending for Social Security but I'm not sure if you can adjust it for other things like paying off a mortgage or selling the boat.

In fact if you're retired you have to trick FE into thinking that you're still working.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: Financial Engines feedback
Old 11-14-2006, 03:11 PM   #27
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 10,147
Re: Financial Engines feedback

That's why I use it only to calculate estimated portfolio size. I use FIRECALC to then calculate income.
__________________
Living an analog life in the Digital Age.
Gumby is offline   Reply With Quote
Re: Financial Engines feedback
Old 11-14-2006, 04:44 PM   #28
Full time employment: Posting here.
 
Join Date: Feb 2006
Posts: 987
Re: Financial Engines feedback

Quote:
Originally Posted by Nords
no provision for actually changing the portfolio after retirement
Actually, FE does have a disclaimer (on the Vanguard entry point) of "Designed for investors at least five years away from retirement".

Further, it states that "If you're near or in retirement, consider one of Vanguard's other financial planning and advice services."


- Ron
__________________
rs0460a is offline   Reply With Quote
Re: Financial Engines feedback
Old 11-14-2006, 08:33 PM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Brat's Avatar
 
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 5,914
Re: Financial Engines feedback

Ah, and which one are those?
__________________
Duck bjorn.
Brat is offline   Reply With Quote
Re: Financial Engines feedback
Old 11-15-2006, 07:17 AM   #30
Full time employment: Posting here.
 
Join Date: Feb 2006
Posts: 987
Re: Financial Engines feedback

Quote:
Originally Posted by Brat
Ah, and which one are those?
https://flagship.vanguard.com/VGApp/...eOVContent.jsp
__________________
rs0460a is offline   Reply With Quote
Re: Financial Engines feedback
Old 11-16-2006, 04:23 AM   #31
Full time employment: Posting here.
 
Join Date: Sep 2003
Posts: 902
Re: Financial Engines feedback

Quote:
Originally Posted by atla
Does anyone know how FE calculates retirement income?
It has been awhile since I looked into this, but at the time it appeared to me that Financial Engine's results weren't very useful - or at least they were confusing and required considerable caution. I tried to run it down and get it confirmed, but the Vanguard FE support person didn't get what I was asking, and I gave up. But if memory serves, this was the issue in a nutshell:

1) FE projects the value of your portfolio at retirement under various market scenarios utilizing a proprietary Monte Carlo type of algorithm.
2) To determine the annual income the portfolio will provide, the portfolio is "annuitized". In other words, FE presumes that the portfolio will provide the income you would get if you cashed in the portfolio and bought an insurance company annuity with the proceeds.
3) To this they add other income streams you enter into the system (Social Security, pension, etc.).

At the time I was very close to retirement (only a few months) and the annual income projection I was getting from FE was quite a bit higher than all other projections I was using. FireCalc was by far the most useful, IMO, but I used several others and they were all pretty close - except for FE. Although FE's site clearly stated that the projected income takes future inflation into account, I learned (if I can rely on the Vanguard FE rep) that this is only partly true. As I understand it, FE takes inflation into account only until the date of retirement. The annual income they project is a combination of the estimated annuity income (which is NOT pegged to inflation and will likely gradually lose purchasing power) and SS (which IS pegged to the CPI). So it appeared to me at the time that they were mixing different types of incomes (some pegged to inflation and some not) and they were not accounting for those differences.

I don't believe the Vanguard FE rep quite understood the questions I was posing. He quickly tired of the discussion and suggested that I hire a financial planner, so I wasn't able to verify everything, and by then I didn't really give a rip because I had pretty much decided that the projections FE provides aren't really all that useful if I have no way to verify their methods.

So FWIW, if you intend to use FE, I'd limit the data you input to those things that are not tied to inflation (so the projected income doesn't mix apples and oranges), and realize that the income they project does not take post-retirement inflation into account - which I think is one of the most, if not THE most important things one must consider.

So that was my take on it at the time, and I always hold out the very real possibility that I may be wrong.
__________________
Bob_Smith is offline   Reply With Quote
Re: Financial Engines feedback
Old 11-16-2006, 05:58 PM   #32
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,318
Re: Financial Engines feedback

Quote:
Originally Posted by Bob_Smith
It has been awhile since I looked into this, but at the time it appeared to me that Financial Engine's results weren't very useful - or at least they were confusing and required considerable caution. I tried to run it down and get it confirmed, but the Vanguard FE support person didn't get what I was asking, and I gave up. But if memory serves, this was the issue in a nutshell:

1) FE projects the value of your portfolio at retirement under various market scenarios utilizing a proprietary Monte Carlo type of algorithm.
2) To determine the annual income the portfolio will provide, the portfolio is "annuitized". In other words, FE presumes that the portfolio will provide the income you would get if you cashed in the portfolio and bought an insurance company annuity with the proceeds.
3) To this they add other income streams you enter into the system (Social Security, pension, etc.).

At the time I was very close to retirement (only a few months) and the annual income projection I was getting from FE was quite a bit higher than all other projections I was using. FireCalc was by far the most useful, IMO, but I used several others and they were all pretty close - except for FE. Although FE's site clearly stated that the projected income takes future inflation into account, I learned (if I can rely on the Vanguard FE rep) that this is only partly true. As I understand it, FE takes inflation into account only until the date of retirement. The annual income they project is a combination of the estimated annuity income (which is NOT pegged to inflation and will likely gradually lose purchasing power) and SS (which IS pegged to the CPI). So it appeared to me at the time that they were mixing different types of incomes (some pegged to inflation and some not) and they were not accounting for those differences.

I don't believe the Vanguard FE rep quite understood the questions I was posing. He quickly tired of the discussion and suggested that I hire a financial planner, so I wasn't able to verify everything, and by then I didn't really give a rip because I had pretty much decided that the projections FE provides aren't really all that useful if I have no way to verify their methods.

So FWIW, if you intend to use FE, I'd limit the data you input to those things that are not tied to inflation (so the projected income doesn't mix apples and oranges), and realize that the income they project does not take post-retirement inflation into account - which I think is one of the most, if not THE most important things one must consider.

So that was my take on it at the time, and I always hold out the very real possibility that I may be wrong.
I agree with your statement regarding FE projections being higher than other estimates. I ran the same number through FE and Fidelity and found FE portfolio projections to be 5% higher and the projected income to be about 10% higher than Fidelity.

__________________
Corporateburnout is offline   Reply With Quote
Re: Financial Engines feedback
Old 11-16-2006, 08:11 PM   #33
Full time employment: Posting here.
 
Join Date: Sep 2003
Posts: 902
Re: Financial Engines feedback

Yes, and did you notice that under the "retirement forecast" (where they provide your annual retirement income projection) they include the following comment:

"Amounts shown are in pre-tax dollars and have been adjusted for inflation."

But they only adjust for inflation up to the date of retirement - not after. So the annual income they project will gradually lose its purchasing power. This strikes me as very likely to mislead anyone who doesn't realize what FE is doing, and their added comment about adjusting for inflation adds to the likelihood that the annual income projection will be misunderstood.

If you include nothing in the FE equation but your investment portfolio (IOW, no SS), after retirement you would need to slash the annual income they project by somewhere in the vicinity of 40%-50% to keep pace with the US historical worst case inflation scenario going forward. If you include other income streams, like SS, that ARE pegged to inflation, I believe that they just add those in (minus the years until you collect)... so now you have a projected income that includes a mix of income streams with some pegged to inflation, and some not, and no consideration for the difference... a real cluster f**k. Plus it seemed to me that their annuity figures were off by quite a bit. All-in-all I found it to be a pretty convoluted and useless tool. Maybe I'm missing something.
__________________
Bob_Smith is offline   Reply With Quote
Re: Financial Engines feedback
Old 11-18-2006, 01:37 AM   #34
Full time employment: Posting here.
 
Join Date: Feb 2006
Posts: 987
Re: Financial Engines feedback

Quote:
Originally Posted by Corporateburnout
I agree with your statement regarding FE projections being higher than other estimates. I ran the same number through FE and Fidelity and found FE portfolio projections to be 5% higher and the projected income to be about 10% higher than Fidelity.
Part of the "challange" (and can account for some difference) is the life expectancy "built in" to FE. Here's what they say:

"The Personal Online Advisor updates the mortality tables periodically to estimate population-average mortality rates for different genders within different age groups. Since these mortality rates are population averages, they do not incorporate individual-specific lifestyles or health status."

On FE, I'm assuming my mortality is set to the "average" of mid-80's (based upon the federal guidelines). However, within Fidelity's tool, I set it for the mid-90's (average +10, "just in case"). Of course, FE will "look better" than Fidelity in this situation, due to the extended draw-down at a longer age.

- Ron...
__________________
rs0460a is offline   Reply With Quote
Re: Financial Engines feedback
Old 11-18-2006, 12:14 PM   #35
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 5,725
Send a message via Skype™ to kcowan
Re: Financial Engines feedback

Quote:
Originally Posted by Ron'Da
Part of the "challange" (and can account for some difference) is the life expectancy "built in" to FE. Here's what they say:

"The Personal Online Advisor updates the mortality tables periodically to estimate population-average mortality rates for different genders within different age groups. Since these mortality rates are population averages, they do not incorporate individual-specific lifestyles or health status."

On FE, I'm assuming my mortality is set to the "average" of mid-80's (based upon the federal guidelines). However, within Fidelity's tool, I set it for the mid-90's (average +10, "just in case"). Of course, FE will "look better" than Fidelity in this situation, due to the extended draw-down at a longer age.
- Ron...
And this is the biggest error in the planning tool. I used a life expectancy tool from Harvard and the outcome for me was:
Median 89.5
25% quartile 84
75% quartile 96
so it has shaped my thinking about FIRE versus using a standard age. My Dad lived to 95. The spread was shocking to me and makes using an average (for the population) median age the biggest inaccuracy IMHO.
__________________

__________________
For the fun of it...Keith
kcowan is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Changing the balance of quality of life and financial independence cute fuzzy bunny Life after FIRE 229 06-14-2013 03:17 PM
Financial Engines vs. FIREcalc tlockwood FIRE and Money 12 05-06-2007 10:07 PM
Does your spouse share your financial goals? JustCurious FIRE and Money 41 02-17-2007 07:20 PM
Financial Engines through Vanguard Dude FIRE and Money 21 01-20-2006 10:21 PM
eBay neutral feedback?!? Nords Other topics 14 01-03-2006 07:11 PM

 

 
All times are GMT -6. The time now is 06:04 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.