Retirement simulator for income stocks?

[kyounge1956]

I was quite interested in the recent thread "Interesting comments on annuities". My original plan was to take a partial lump sum from my pension system and buy an immediate annuity within my IRA, leaving the rest of my savings at a 30% stock/70% bond allocation. I haven't thoroughly read the thread, but the title alone makes me wonder how dividend-paying stocks or funds would fit, especially with a withdrawal plan of spending the dividends only.

Does FireCalc, or any other calculator known to the collective wisdom of E-R.org, allow simulating a retirement plan with income from pension + immediate annuity + dividends (and SS later on) from historical data? Alternatively, is there a way to translate the performance data available about a fund or stock on finance sites into a return and standard deviation to input to FireCalc and other simulators? It's possible to get from Yahoo Finance a download to spreadsheet with the dividend payments for many years back, for example the data on psst Wellesley goes back to 1987. The idea of making no assumption at all that stocks will go up in value appeals to my scaredy-cat side. From what I've read, dividends have a serial correlation of over 90%, which if I understand it right means that this year's dividend is very likely to be about the same as last year's dividend. That stability appeals to the scaredy-cat too.

 

[pb4uski]

Wouldn't you just run and compare two Firecalc scenarios? One with all assets and no SPIA and another with less assets and the SPIA included as a pension?

And make sure that the investment portfolio composition of each scenario reflects what you intend to happen.

Then print out the results page for each scenario and compare the results.

 

[kyounge1956]

Wouldn't you just run and compare two Firecalc scenarios? One with all assets and no SPIA and another with less assets and the SPIA included as a pension? (snip)

I didn't see any way on FireCalc to simulate stocks would include dividends only, they all appear to be "total return". For that matter, I didn't see any way either to model a ladder of bonds or CDs and spend only the interest. Am I missing something obvious?

 

[pb4uski]

Ah, I see. Since Firecalc requires that you provide it with a spending assumption I don't see how you could do what you are looking to do - but perhaps some others will have a better idea.

 

[REWahoo]

I didn't see any way on FireCalc to simulate stocks would include dividends only, they all appear to be "total return". For that matter, I didn't see any way either to model a ladder of bonds or CDs and spend only the interest. Am I missing something obvious?

No, you aren't missing anything. FIRECalc was designed to allow you to set an annual spending amount (withdrawal) and measure how your portfolio would have performed historically with the investment options found in the "Portfolio" tab. The program is reasonably flexible but there are things it cannot do.

 

[rescueme]

Does FireCalc, or any other calculator known to the collective wisdom of E-R.org, allow simulating a retirement plan with income from pension + immediate annuity + dividends (and SS later on) from historical data?

From historical data? No. From hysterical data? Sure ...

Seriously, while I use many calculators for financial forecasts, my "main" calculator to use is the Retirement Income Planner (e.g. "RIP") from Fidelity (e.g. "FIDO"), which does allow for various income/expense streams going forward, by date.

Future pension? Plug it in, dollars and dates (start/stop). DW starts two small DB pensions in six months.

SPIA? Sure, we have one; just plug it in.

Dividends? Assuming you use Fidelity's Full View (which imports all your/spouses holdings, regardless of FIDO holdings, or not), expected dividends will be captured, based upon actual history.

SS (later on?) Of course; I have DW's SS (at FRA age), my 50% claim against her for 3.5 years (until I turn 70, and claim my own) and my SS statement (adjusted for expected inflation, in the future).

Unlike FireCalc (wich I use as an additional "free tool"), RIP works on Monte Carlo simulation which gives you a "guesstimate" of future results.

In addition, RIP is more detailed in the expense side, since it lets you forecast expenses by month/year of expectations. For instance, we forecast $30/40k per year for travel at the current time, but reduce it each decade as we age, when we expect our travel expenses to be reduced.

OTOH, we increase our "personal assistance" expenses (such as house maintenance - lawn care/snow removal/cleaning services/personal assistants) due to our age, in the future. The expense module is very detailed, but once you do it, you need not modify it unless you actually experience an actual change.

A nice product, at a nice price (free). If you are not a FIDO customer, you can sign on (create a profile) and use it anyway...

Just my answer to the OP.

 

[kyounge1956]

@rescueme, I will check out RIP. I didn't know you could use it without having an account at Fidelity, which I don't. Thanks for the tip.