Firecalc vs Fidelity RIP

[ronin]

RIP - Retirement Income Planner

 

[Huston55]

RIP - Retirement Income Planner

RIP-Retirement Income Planner is the Fidelity retirement planning and analysis tool. You have to be a Fidelity member to use the tool. Although, there may be a free trial available-not sure, since I have a Fidelity acct and use the tool.

 

[youbet]

more accurate treatment of taxes (thus, more accurate net income answers).

How do you know this? Or are you just saying that you haven't done much work, with the usual tools, to estimate your future tax burden and therefore anything RIP does regarding taxes is better than what you've done?

I'm not sure I trust RIP's implied accuracy regarding tax predictions 15 - 20 - 25 yrs or more out.

 

[youbet]

2) The methodologies are completely different. FIREcalc uses actual market return series. RIP uses Monte Carlo approach. Therefore don't be surprised to get different results. I am not sure that one method is "better" than the other, both are widely used but be aware they use different methodologies.

.

There is the real difference. The only important difference. And it's a big one.

I like RIP for some of its convenient features. But FireCalc is where I discovered and became comfortable with the fact that my FIRE portfolio performance is likely to be highly variable vs. my plans and a wild ride, over which I'll have only limited control, is likely.

I'm suspicious of any retirement planning tool that implies you're going to have accurate control over future results if your plan incudes a significant portion of your RE income coming from a FIRE portfolio. FIRECalc lays it right out there. Based on historical returns and inflation, it tells me that 30 yrs out I'll be somewhere between broke and having a multiple of my current wealth! I think that's about as accurate as it gets!

 

[Alan]

RIP-Retirement Income Planner is the Fidelity retirement planning and analysis tool. You have to be a Fidelity member to use the tool. Although, there may be a free trial available-not sure, since I have a Fidelity acct and use the tool.

You don't have to have any money invested to be a "member". I tried it out last week without logging in. You can create a username to be a member and use the tool. Being an account holder has the advantage that you can use "Full View" and enter your login details for your financial institutions if you wish, and then the values of your holdings are imported for you.

Otherwise, you can enter gross amounts and your own breakdown percentages (Stocks/bonds/cash), or enter ticker numbers plus number of shares and have Fidelity work out the breakdowns.

The budget tools look to be the same whether you are an account holder or just a member.

 

[Huston55]

How do you know this? Or are you just saying that you haven't done much work, with the usual tools, to estimate your future tax burden and therefore anything RIP does regarding taxes is better than what you've done?

I'm not sure I trust RIP's implied accuracy regarding tax predictions 15 - 20 - 25 yrs or more out.

I'm comparing what RIP does do (estimates taxes based on Fido's edtimated optimum withdrawal strategy; taxable, deferred, Roth, etc.) to what FIREcalc doesn't do; no estimate of taxes. So, yes I'm saying RIP is better for me because it does this calc.

Regarding the question of Fido/RIP's accuracy estimating taxes, I can't speak to that. I haven't done my own estimate, other than high level crude ones. Thus, I have no detailed analysis to compare RIP's tax results to. So, I'm accepting the accuracy of Fido/RIP's tax estimate at face value (and my own 'ho ho' test looking at it on RIP's detailed annual cash flow analysis report). But, I'm also accepting a lot of other algorithms in both tools at face value, and am willing to accept that.

Having said all that, I do like to use multiple tools (RIP, FIREcalc, and Hebeler's Analyze Now) to confirm the answers I get, and take comfort when they're all giving me comparable answers. But, so far, I like the RIP tool best.

 

[Huston55]

You don't have to have any money invested to be a "member". I tried it out last week without logging in. You can create a username to be a member and use the tool. Being an account holder has the advantage that you can use "Full View" and enter your login details for your financial institutions if you wish, and then the values of your holdings are imported for you.

Otherwise, you can enter gross amounts and your own breakdown percentages (Stocks/bonds/cash), or enter ticker numbers plus number of shares and have Fidelity work out the breakdowns.

The budget tools look to be the same whether you are an account holder or just a member.

Alan

Thx. Good to know when discussing with friends who are curious about RIP.

 

[Alan]

Alan

Thx. Good to know when discussing with friends who are curious about RIP.

I expect it is also a marketing tool. Being a member means they keep your details from one log in to the next so folks are likely to use it repeatedly since updates of their details are easy. Maybe some of the members become account holders.

 

[LOL!]

I just noticed this thread went on without me.

I wanted to point out another retirement income planner that I have found useful:

Jim C. Otar's Retirement Optimizer. It's a spreadsheet you download and away you go. It has FIRECalc-like algorithm which Otar has called an "aft-cast", but lots, lots more, like plugging in laddered SPIAs.

A good list of such calculators with links:
Wiki article link: Retirement calculators and spending

 

[Nords]

Jim C. Otar's Retirement Optimizer. It's a spreadsheet you download and away you go. It has FIRECalc-like algorithm which Otar has called an "aft-cast", but lots, lots more, like plugging in laddered SPIAs.

I've been researching/reviewing retirement calculators and coincidentally I just finished going through Otar's website a few hours ago (for tomorrow's post). It looks like he's put a lot of work into his upgrade. I remember the fuss when he published his book a couple years ago, but not too many people are dismissing his annuity ideas these days.

Problems with retirement calculators | Military Retirement & Financial Independence
Retirement planners and calculators (part 1 of 2) | Military Retirement & Financial Independence
USAA on retirement calculators | Military Retirement & Financial Independence (available to anyone, not just USAA members)

A good list of such calculators with links:
Wiki article link: Retirement calculators and spending

I stumbled across that link, too. Great reference.

I'll put up the second part/final post on Thursday 1 Dec 5 AM HST.

 

[jIMOh]

I agree with all except the above line.

Sure, we don't know that a past 90% scenario will play out to be 90% in future scenarios. But, a scenario that indicates a 95% success rate will certainly be more resilient than one that indicates an 85% success rate.

Even if we accept the 20% error estimate, that error would apply pretty much equally to all the scenarios. It doesn't justify saying that 95% and 85% are pretty much the same.

An analogy: We take two identical cars, with identical driver habits, - fill one with 8.5 gallons of gas, another with 9.5 gallons of gas. We could run multiple tests, driving the two cars together on a variety of traffic scenarios. We may only have ~ 20% accuracy in predicting how far they go, due to variations in the trip. But it is clear that the one with more gas will go further.

I really think Bernstein is talking in terms of absolute accuracy of these tools (does 95% mean 95%?), not their relative accuracy (is 95% > 85%?).

-ERD50

I don't need to be successful 95% of the time or 85% of the time. I need to be successful the one time I do it. I only have "one shot" at doing it right.

It is more important to know what variable caused the 10% difference? If a person changes allocation and sees the results change, great, if a person changes the age and sees results change, even better. If a person changes the starting investment amount for the better result, excellent.

A person should do more than one Monte Carlo to see what their risks are. Just because most of us use the same calculator does not mean we have the same risks. Focus on the differences which generate the success rates, and why one is more successful than the other- that is the true value of those tools, IMO.

 

[Huston55]

Nords & LOL-

Great links; some new ones here I will check out. Thanks much.

 

[Nords]

Here's the second part:
Retirement planners and calculators (part 2 of 2) | Military Retirement & Financial Independence

 

[Huston55]

There is the real difference. The only important difference. And it's a big one.

I like RIP for some of its convenient features. But FireCalc is where I discovered and became comfortable with the fact that my FIRE portfolio performance is likely to be highly variable vs. my plans and a wild ride, over which I'll have only limited control, is likely.

I'm suspicious of any retirement planning tool that implies you're going to have accurate control over future results if your plan incudes a significant portion of your RE income coming from a FIRE portfolio. FIRECalc lays it right out there. Based on historical returns and inflation, it tells me that 30 yrs out I'll be somewhere between broke and having a multiple of my current wealth! I think that's about as accurate as it gets!

I just discovered another feature of Fido RIP, one related to the important aspect of variability.

When running a scenario recently, I noticed in the detailed cash flow summary that the starting portfolio value was about 12% lower than our current portfolio value. Since the hypothetical retirement year I used in the tool was only one year from now, that puzzled me. When I asked Fido, the RIP tool team said that because the tool is set to give a high confidence level (>=90%) that it automatically includes what would be one of the worst scenarios (big decline early in retirement).

I'd never noticed this before. The explanation was comforting, since this would be one of the worst ER scenarios. Meaning, if my portfolio survived in the RIP scenario, I could take a 12% hit the first year of FIRE and still come out OK.

Has anyone else noticed the same pattern when using RIP?

 

[Steelart99]

RIP import?

Being an account holder has the advantage that you can use "Full View" and enter your login details for your financial institutions if you wish, and then the values of your holdings are imported for you.

I'm new here, and I know that this is an older thread. I've been running RIP for several weeks, and I don't see where I can add login details of other financial institutions. Can you point me to that feature?
Thanks
Dan

 

[Dimsumkid]

I'm new here, and I know that this is an older thread. I've been running RIP for several weeks, and I don't see where I can add login details of other financial institutions. Can you point me to that feature?
Thanks
Dan

You need to be logged into your account, while in Full View, use the Manage Account tab or in Net Worth, there's an Add Account link at the bottom of Assets list.

 

[Steelart99]

I have access to RIP through my Fidelity Net-benefits 401K; but that apparently does not give me access to the "Full view" and "Manage Account" functions. Thanks for pointing me in the right direction.
Dan