FinancialEngines.com IPO

[Nords]

Looks like Bill Sharpe is contemplating cashing out:
Nobel Winner Sharpe's Firm Prices IPO Above Range (Update1) - BusinessWeek

FNGN gains 40%

One of the more successful 2010 IPOs. It'll be interesting to see how it holds up when the lockup expires...

 

[IndependentlyPoor]

I used Financial Engines before retiring. Megacorp had a free link to it. I was impressed enough to cough up $300 some-odd dollars for a year's subscription for myself later. I ran scenarios until they were coming out of my ears, trying to build up enough confidence to pull the plug.

My only outstanding memory of the results is that it was very easy to increase the expected return... as long as you didn't mind sending the standard deviation through the roof. It was very hard to do much better than a plain-Jane conservative stock/bond allocation.

Last year I talked to their sales folk about withdrawal stage projections. They claimed to be working on it, but I don't know if it is out yet. When I last used it their "green light for retirement" is based on the cost of an annuity that pays enough to meet your expected needs.

 

[REWahoo]

When I last used it their "green light for retirement" is based on the cost of an annuity that pays enough to meet your expected needs.

Yep.

I also ran Financial Engine scenarios out the wazoo in the latter years of the accumulation phase and was always left with the "OK, then what?" question regarding the withdrawal phase. That's why I was elated to stumble across FIRECalc in 2002 and three years later I pulled the plug.

 

[rescueme]

From the F.E. site:

"To estimate your retirement income, we use a process called annuitization and adjust for inflation to translate estimated portfolio values at retirement age into annual pre-tax estimated retirement incomes in today's dollars."

In other words (as I understand it), they assume you will convert your portfolio at retirement to an annuity and have that income stream along with any others (SS, pension, etc.) There is no assumption that you have to "plan" while you are retired.

That makes little sense since one of the "strongly suggested" facts concerning an annuity (more specifically an SPIA) is not to annuitize more than 50% of your portfolio.

F.E.'s said that they were working on a "retirement version" for at least the last five years (when I started questioning them). Of course, I don't pay for the service (I get it free via VG) so I really don't care.

For my heavy lifting, I use Fidelity's RIP (and cross-checked with other products, such as FIRECalc).

 

[Alan]

I also used FE extensively in my early days of RE planning - it came free through Vanguard. However I stopped using it once I was a few years away as it assumed everything was annuitized once you retired. I did like using it during the accumulation phase.

FIRECALC and Fido's RIP are the ones I've used most this last few years.