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OMY Calc idea prototype - feedback request.
Old 11-22-2015, 08:01 PM   #1
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OMY Calc idea prototype - feedback request.

Moderator Question/Comment: I read through the FAQ to try and make sure I'm not violating any policies. My intention is to try and make a tool that I (and maybe others?) might find useful. Since I believe in rapid prototyping and iteration, I'm hoping to get some early feedback. If this is in violation, please take it down and I won't post again .

EALY VISUALIZATION
You can see this at: OMY... well... should I?

What you see is just graphic versions of a very basic google doc. Rather than code it all up seems to make sense to show what input/output might look like.

CURRENT GOAL
The goal is very simple for this version. I am currently NOT retired but CLOSE and thus fall squarly into the OMY problem. While there are MANY elements to consider, a huge one for me is the fear of money running out which acts as a strong motivation to keep saving.

It's incredibly easy to calculate the financial risk impact of working one more year. It's less easy to calculate the non-financial risk impact. So I started with the most basic and high level stat, which is mortality.

Essentially this version just tells me that for someone my age/savings rate/withdrawal rate what is the impact of OMY of work/saving on my longevity and mortality.

In this hypothetical example, I can see my withdrawal rate dropping while my life expectancy also drops and my chance of dying increases. From early tinkering I was pretty amazed at how rapidly this can change at various stages. in short, working 5 OMYs when you are 30 to get your WR from 4.5 to 3.5% vs. mortality/life expectancy is really different than working 5 OMYs to go from 3.5% to 3.2% SWR when you are 50. Also, seeing my own life expectancy drop by about 5 years during those 5 years is like watching the candle burn from both ends... additionally, I would expect the last 5 years to be qualitatively different than the next 5.

FEEDBACK REQUEST
I'd appreciate any and all feedback. I have no intention of putting up a bunch of ads or trying to make this some kind of business venture. It's something I'm doing anyway to help myself and I hope it might help some others. I have tons of respect for all the people on this board and you guys have helped me a ton.

Feel free to be brutal. I've been a software developer for a few decades and will take it as a compliment that you even take a look and give me a comment even if it's "that sucks."

APPENDIX
Mortality data: https://www.ssa.gov/oact/STATS/table4c6.html
Firecalc success rate: FIRECalc: A different kind of retirement calculator (using the inputs in the graphic)
Technology: Built using PHP and Bootstrap (should work on phones decently well)
Prototyping: Tables built in Google sheets, uploaded as images.


Thanks!
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Old 11-22-2015, 08:58 PM   #2
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Here's my feedback (you said you wanted it...)

- The only thing it offers different than firecalc is the mortality figures. The growing nest egg/withdrawal rate, etc can be what if'd in firecalc using the "Not Retired Yet" tab.

- The tables weren't very clear... You designed them for your use... so you get them.. but it's kind of like my "big" spreadsheet that holds all my "when to take SS", my budgets, my projections. (It has a lot of sheets).... It is very confusing to anyone but me - but I find it useful to explore *my* questions. This output looks similar - it has data in a form *you* can extract what you want... but it's not very intuitive.

- I wish you'd taken some of the non-financial suggestions made to you in this thread. You could have people weigh the importance of various non-financial things like: commute, time with family, healthy years with spouse, no-more-annoying-boss.... Have folks input on a scale of 0-5 (or 1-100, or whatever) how important it is to change that factor... and output that as an overall factor to compare against the money factors.
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Old 11-23-2015, 02:35 AM   #3
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I'm not sure I would say that your table's weren't clear, but the calculations looked overly simplified. You put a baseline firecalc calculation and then assume for your number of "OMY" you seem to assume a fixed rate of return. As rodi note that you could do what if calculations on firecalc. This would give some estimation of a OMY being a down year too. You would end up with different likelihoods of success.
There are other calculators (MC or backtest) that will allow you to make predictions while one is still working, RIP also can do these calculations.
I still see OMY as the reaction of people to push RE out, not something one plans. I don't see that if I plan to retire in 2 years that I have 2 OMY. There are some that are either cutting it too close or just a bit skiddish that they back out RE. And yes, some do it many times. But this is just terminology (that I may have wrong).
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Old 11-23-2015, 10:19 AM   #4
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I pretty much echo rodi's comments, but I guess it is a more convenient way to look at it, rather than multiple FC runs.

I'm not sure Life Expectancy should play into it in the way you propose (or maybe I'm not following). That is just a probability, good for large number groups, not very meaningful for an individual. I prefer to prepare for (different than plan for) the more extreme case of one of a couple living a long life. At least 95 unless there are known health issues that make that unlikely.

So the only effect is, at 50 to 51 YO, you go from a 45 year profile to a 44 year profile, etc.

Does this account for SS/pensions, etc? That sets a floor, especially COLA'd sources.

I should add - I applaud your efforts to make a tool like this public. It's great to see some of these efforts shared, and the feedback helps to build them to be better and better.

-ERD50
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Old 11-23-2015, 10:32 AM   #5
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Quote:
Originally Posted by petershk View Post
So I started with the most basic and high level stat, which is mortality.
I don't think mortality is a good stat to focus on in your current setup. The life expectancy change by waiting OMY is almost exactly 1 year. So putting this in a table isn't really showing us anything helpful.

As others have mentioned, the financial part in your demo can be handled by firecalc or similar calculators. (As a side note, I don't think firecalc is particularly good starting point for computing the marginal change in failure rate by waiting OMY since it's so coarse grained but this is a different issue)

This isn't exactly a OMY calculation, but what I think might be interesting is to visualizing the impact of life expectancy on top of the firecalc portfolio calculation. Perhaps by overlaying remaining life expectancy on top of the firecalc lines (maybe set the width proportional to probability of reaching that age as per the Napolean's March chart or some variation on this). Sure one might have a 5% chance of running out of money in 30 years, but you only have 2% probability of living that long.
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Old 11-23-2015, 10:39 AM   #6
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Quote:
Originally Posted by photoguy View Post
... (As a side note, I don't think firecalc is particularly good starting point for computing the marginal change in failure rate by waiting OMY since it's so coarse grained but this is a different issue) ...
Yes, looking at failure rates in FIRECalc is pretty coarse grained. The way I get around this is to use "Investigate" and set it report the spending level for X% success. This will give you the other extreme - resolution to the dollar !

-ERD50
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Old 11-23-2015, 11:10 AM   #7
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To the OP--thanks for the work and for posting this. I have no detailed analysis to offer, just some perceptions.
1) The changes in "projected sustainable spending" side just wouldn't change very much for most people at retirement ages less than about 70 YO. This is due to the big uncertainty of how much time we must plan for.
2) The biggest changes that result from working OMY for many people would come from non-liquid factors, and the present calculator doesn't consider these (and doesn't claim to). Factors of this nature might include increased SS monthly payments, a bigger company pension, higher monthly payments from any investments in annuities, etc.
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Old 11-23-2015, 02:21 PM   #8
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Thanks a lot guys.
My theory was that seeing the mortality rate and longevity change alongside that financial security change... It would help even out the analysis.

That seems flawed. The reasons seem to be that the financial planning is really looking at extremes (not "can I make it on average".. But "can I make it to 95 or 100") whereas life expectancy is average.

Since omy is very personal that's not meaningful.

I spent a bunch of time reading omy threads to see if there are a series of common factors and if they can be grouped and valued in some way.

Im not a fan of survey type calculators but maybe there's some way to make it work and then the mortality data is more useful.


So I'm exploring questions like "if you were retired today and offered your current job, would you take it?" And "if your liquid net worth suddenly doubled would it change your omy status?"

Maybe 10 or 12 questions targeting various common themes in some likert scale would be interesting and then link that to more information.

From reading a lot of the threads many people are kind of looking for a "push" or at least a sanity check. I think much of this is because you have to 'justify' leaving your current situation more than staying in it .

I myself would NOT take my current job if offered and I was retired, but I haven't quit yet either .

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Old 11-23-2015, 03:37 PM   #9
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I like your proposed questions. Especially the one that hypothetically you're retired already and offered your current job... That kind of gets to the inertia issue... it's easier to stay put than to make change....
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Old 11-23-2015, 09:07 PM   #10
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Quote:
Originally Posted by petershk View Post
Moderator Question/Comment: I read through the FAQ to try and make sure I'm not violating any policies. My intention is to try and make a tool that I (and maybe others?) might find useful. Since I believe in rapid prototyping and iteration, I'm hoping to get some early feedback. If this is in violation, please take it down and I won't post again .

EALY VISUALIZATION
You can see this at: OMY... well... should I?

What you see is just graphic versions of a very basic google doc. Rather than code it all up seems to make sense to show what input/output might look like.

CURRENT GOAL
The goal is very simple for this version. I am currently NOT retired but CLOSE and thus fall squarly into the OMY problem. While there are MANY elements to consider, a huge one for me is the fear of money running out which acts as a strong motivation to keep saving.

It's incredibly easy to calculate the financial risk impact of working one more year. It's less easy to calculate the non-financial risk impact. So I started with the most basic and high level stat, which is mortality.

Essentially this version just tells me that for someone my age/savings rate/withdrawal rate what is the impact of OMY of work/saving on my longevity and mortality.

In this hypothetical example, I can see my withdrawal rate dropping while my life expectancy also drops and my chance of dying increases. From early tinkering I was pretty amazed at how rapidly this can change at various stages. in short, working 5 OMYs when you are 30 to get your WR from 4.5 to 3.5% vs. mortality/life expectancy is really different than working 5 OMYs to go from 3.5% to 3.2% SWR when you are 50. Also, seeing my own life expectancy drop by about 5 years during those 5 years is like watching the candle burn from both ends... additionally, I would expect the last 5 years to be qualitatively different than the next 5.

FEEDBACK REQUEST
I'd appreciate any and all feedback. I have no intention of putting up a bunch of ads or trying to make this some kind of business venture. It's something I'm doing anyway to help myself and I hope it might help some others. I have tons of respect for all the people on this board and you guys have helped me a ton.

Feel free to be brutal. I've been a software developer for a few decades and will take it as a compliment that you even take a look and give me a comment even if it's "that sucks."

APPENDIX
Mortality data: https://www.ssa.gov/oact/STATS/table4c6.html
Firecalc success rate: FIRECalc: A different kind of retirement calculator (using the inputs in the graphic)
Technology: Built using PHP and Bootstrap (should work on phones decently well)
Prototyping: Tables built in Google sheets, uploaded as images.


Thanks!
I use now - FIREcal, Fidelity calculator and Vanguard/Financial Engines. My feedback - how this new calculator will be different form others? Yes, you can add one/two useful features, but generally speaking I'd be looking more for continuity. What does it mean? This mean that I'd like to see *one* calculator evolving overtime and be unrelated to any vendor.
So if we could have say FIREcalc, which is very good, prettify it, have issue tracking system, make it opensource, that'd be great.

(maybe FIREcalc is opensource, is it?)
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