My understanding is that FE retirement income assumption is based on putting everything into an annuity indexed for inflation at retirement. That could explain the rosy 6% spending rate.
I just tried it and was underwhelmed. It transferred most of my accounts from VG including outside investments I track there. It didn't transfer the data from our joint taxable account so I added that in manually. I couldn't see any way to make the planning engine understand that I am not single - for tax or for account holding so I just let it assume all the accounts were mine. Retiring at age 69 (coming up this summer) it advised me that I could go with over 6%/year and told me to expect up to a 12% crash in the next decade.
I have heard a lot of good things about this planner so I am guessing I didn't see how to tune it. Or maybe the VG free version is crippled.
I don't think you are correct about them using annuities to project results.
This from their site:
Investment Analysis Methods: Any forecasts presented are not a guarantee of future results, but only reasonable estimates. Forecasts are based upon information about you and your current accounts and investments that we know about, estimated annual savings amount and forward-looking models of the economy and securities markets that utilize data such as historical returns, historical correlations, expected growth rates, and calculated risk premiums. Since past performance is not an accurate predictor of the future and reliance on historical and current data necessarily involves inherent limitations, you must understand that the estimates are only a tool to be used in evaluating your retirement portfolio. Forecast amounts are in today's dollars, which means that they have been adjusted for inflation.
Forecasts are created by generating thousands of hypothetical future economic scenarios to evaluate how an investment portfolio might perform under a variety of circumstances, including changing interest rates, inflation, and market conditions.
...and
About Your Retirement Forecasts:
To show your forecasts, we take the 5th, 50th, and 95th percentiles of thousands of hypothetical future economic scenarios. There is a 50% chance that you will have at least the "average market performance" forecast. There is a 5 % chance that you will have the "poor market performance" forecast or less, and a 5% chance that you will have the "excellent market performance" forecast or more. Charts or graphs may not be drawn to scale.
Unless otherwise specified, the forecasts assume your current retirement decisions. If a forecast specifies that it is for your new plan, it assumes that you implement all your new retirement decisions as shown on your "Review Plan."
Forecasting Risk Over Time: If you hold a fund whose investment objective includes reducing risk over time (typically referred to as "target date funds"), we model its declining risk according to its stated timeframe. For other investments, we assume you maintain a constant investment mix through time; it may be appropriate for you to reduce your investment risk as you approach retirement, but the service cannot predict your future decisions and therefore assumes a constant mix of those investments. In general, if you hold any investments that cannot be reallocated by you, we model those investments on a "buy and hold" basis, rather than assuming that you will adjust their proportions over time.
donheff, don't know why you're having those problems; for me they import everything from VG per registration. And my profile shows us married & our respective ages. I guess I set up the profile some time ago, & they save/update it.
I too am a bit skeptical about the income/withdrawal rate, also about 6%. Think we'll stick with the current 1.2%, or less when we start SS in a year or so.
The rest of it looked about right, but I quit before proceeding since it couldn't get my assets right to start with. Hopefully it works correctly for others, but glitchy for me...
