Fidelity Retirement Analysis Tool

[G-Man]

I did a Lean FIRE so my spending was much lower. Mr. Markets been nice so I've bumped up my spending but Covid dropped it back again. Im happier spending less and being unemployable than working and spending more.I'm a fan of RPM. Easy to use and forced me to break expenses out in categories.
As others said, it's pessimistic as Monte Carlo methods don't factor in normal behavior. However the tools worse case matched my simple spreadsheet worse case of two double digit down years followed by 5 side ways years.

Some small gotchas:
It may say the plan fails. If it has a 30% chance of failing at a point when I have a less than 10% chance of being alive I'm counting it as a 3% chance of failure. I think I can change my behavior to account for that.

Essential expenses can be partly discretionary expenses. That car can last longer than expected. My every 5 year car is on year 8.

I never think to input residual values. I'm looking at an RV and a high end one caused a problem, But if I add 30% of the price back in 8 years from now the plan works.

Does the Fidelity Retirement Analysis tool treat expenses tagged as essential difference than those tagged as discretionary? I just have the mortgage and healthcare as essential expenses and everything else in a custom expense bucket called "discretionary" and it is tagged as discretionary expense.

Just want to make sure I'm inputting the data correctly in the tool.

 

[GravitySucks]

Does the Fidelity Retirement Analysis tool treat expenses tagged as essential difference than those tagged as discretionary? I just have the mortgage and healthcare as essential expenses and everything else in a custom expense bucket called "discretionary" and it is tagged as discretionary expense.

Just want to make sure I'm inputting the data correctly in the tool.

Not in the overall analysis but it does show up on the page. It's nice to see what could be cut in emergency situations.

 

[Born2Fish]

I did a Lean FIRE so my spending was much lower. Mr. Markets been nice so I've bumped up my spending but Covid dropped it back again. Im happier spending less and being unemployable than working and spending more.I'm a fan of RPM. Easy to use and forced me to break expenses out in categories.
As others said, it's pessimistic as Monte Carlo methods don't factor in normal behavior. However the tools worse case matched my simple spreadsheet worse case of two double digit down years followed by 5 side ways years.

Some small gotchas:
It may say the plan fails. If it has a 30% chance of failing at a point when I have a less than 10% chance of being alive I'm counting it as a 3% chance of failure. I think I can change my behavior to account for that.

I also retired lean based on my pre-retirement spending level but so far have found that I am spending less in retirement and not giving anything up. DW and I are both content with a simple life. Fishing, walks on the beach, visiting family. Life is good!

I spent a few hours today experimenting with the numbers. I like the tool. Easy to use and the report (table/chart) are really nice.

I am fine using the significantly below average market.

 

[Dtail]

Not in the overall analysis but it does show up on the page. It's nice to see what could be cut in emergency situations.

Does the Fidelity Retirement Analysis tool treat expenses tagged as essential difference than those tagged as discretionary? I just have the mortgage and healthcare as essential expenses and everything else in a custom expense bucket called "discretionary" and it is tagged as discretionary expense.

Just want to make sure I'm inputting the data correctly in the tool.

Agree, but do note that the treatment for rent is different than the treatment for a mortgage expense, as the mortgage expense is expected to dissipate over X years. Not sure of the formula used.

 

[RetiredHappy]

Agree, but do note that the treatment for rent is different than the treatment for a mortgage expense, as the mortgage expense is expected to dissipate over X years. Not sure of the formula used.

Rent and mortgage expenses are treated as the same - an expense is an expense. However, for mortgage, you should enter an end year when the mortgage is fully paid up, freeing up the expense.

 

[daylatedollarshort]

I made my own retirement spreadsheet and then we validated it with a local Fidelity rep and online planner. In my own spreadsheet, I put in not just savings but net worth, which includes home equity. The only true expense with a mortgage is the interest expense. The principal portion of a mortgage payment doesn't lower net worth. It just changes it from liquid assets to home equity.

Most expenses are subject to inflation increases, however a fixed rate mortgage usually is not. My own retirement spreadsheet handled that. I don't remember what the Fidelity program does for mortgage expenses.

 

[Dtail]

Rent and mortgage expenses are treated as the same - an expense is an expense. However, for mortgage, you should enter an end year when the mortgage is fully paid up, freeing up the expense.

Not sure about that. It has been awhile since I added a mortgage expense, but seem to recall that the results were different without adding an end year to the mortgage.
Perhaps it has been changed.

 

[Dtail]

Not sure about that. It has been awhile since I added a mortgage expense, but seem to recall that the results were different without adding an end year to the mortgage.
Perhaps it has been changed.

Rent and mortgage expenses are treated as the same - an expense is an expense. However, for mortgage, you should enter an end year when the mortgage is fully paid up, freeing up the expense.

So just used the Fidelity retirement calculator to test out my statement and it is correct.
Having a mortgage expense without even putting in an end date produces a more positive result than having a rent expense.

I guess not all expenses are treated equally.

 

[G-Man]

Rent and mortgage expenses are treated as the same - an expense is an expense. However, for mortgage, you should enter an end year when the mortgage is fully paid up, freeing up the expense.

I did that for the mortgage as well as the company retiree healthcare premium at 65 due to Medicare.

 

[RetiredHappy]

Not sure about that. It has been awhile since I added a mortgage expense, but seem to recall that the results were different without adding an end year to the mortgage.
Perhaps it has been changed.

I didn't drill that into details but I highly suspect mortgage is considered fixed, and goes down through time using "today's dollars".

 

[Dtail]

I didn't drill that into details but I highly suspect mortgage is considered fixed, and goes down through time using "today's dollars".

Agree theoretically presuming the inflation standard of 2.5% is not applied to a mortgage expense.

 

[CRLLS]

Agree theoretically presuming the inflation standard of 2.5% is not applied to a mortgage expense.

I would assume that entering the PI part of a mortgage payment into the Fido calculator would be right. I would caution to enter the taxes and insurance separately if that is the case. For obvious reasons of course.

 

[G-Man]

I would assume that entering the PI part of a mortgage payment into the Fido calculator would be right. I would caution to enter the taxes and insurance separately if that is the case. For obvious reasons of course.

I just include everything (principal, interest, taxes, and insurance) in the Mortgage bucket. Is that not the correct way to input the mortgage information?

 

[RetiredHappy]

I just include everything (principal, interest, taxes, and insurance) in the Mortgage bucket. Is that not the correct way to input the mortgage information?

No. Insurance and property taxes need to be kept out of mortgage. Insurance and property taxes increase through time. Fixed mortgage payment does not.

 

[G-Man]

No. Insurance and property taxes need to be kept out of mortgage. Insurance and property taxes increase through time. Fixed mortgage payment does not.

Ok.. So, in the "Housing (Primary Res.)" section, I need to enter the following information separately:

Homeowner Insurance
Mortgage (Principle & Interest Only)
Property Taxes

 

[RetiredHappy]

Ok.. So, in the "Housing (Primary Res.)" section, I need to enter the following information separately:

Homeowner Insurance
Mortgage (Principle & Interest Only)
Property Taxes

Yes.

In my case I have 2 other lines, one is so-called Rent/Condo fees - we have very high HOA for all homes in our community and I put in my HOA fees under this item. The other item is "Household Improvement and Maintenance". I put in 5% of my home value for annual maintenance.

Separately, I have yard, pool service, housecleaning, pest control etc under "Other" in Utilities.

 

[G-Man]

No. Insurance and property taxes need to be kept out of mortgage. Insurance and property taxes increase through time. Fixed mortgage payment does not.

I think I get it. The Principle and Interest on the mortgage will eventually go away when the mortgage is paid off. However, the insurance and property taxes will continue after the mortgage is paid. I will make sure I update the end year as well for those expenses.

 

[G-Man]

Yes.

In my case I have 2 other lines, one is so-called Rent/Condo fees - we have very high HOA for all homes in our community and I put in my HOA fees under this item. The other item is "Household Improvement and Maintenance". I put in 5% of my home value for annual maintenance.

Separately, I have yard, pool service, housecleaning, pest control etc under "Other" in Utilities.

I was putting the annual HOA, home improvement and other expenses in a lump sum bucket called "Discretionary".

 

[G-Man]

These are all good tips on entering the data in the Fidelity Retirement Analysis tool. My Fidelity Advisor enter the information completely wrong. So, I really appreciate all the feedback.

 

[RetiredHappy]

I was putting the annual HOA, home improvement and other expenses in a lump sum bucket called "Discretionary".

The tool tracks monthly. You can also put in one-time expenses. These are essential items.

You will need to divide the numbers into monthly.

 

[CRLLS]

Ok.. So, in the "Housing (Primary Res.)" section, I need to enter the following information separately:

Homeowner Insurance
Mortgage (Principle & Interest Only)
Property Taxes

Yes Yes Yes and more.

When I pull up my version, under Housing (Primary Residence) I get the following items to fill in

Homeowner’s Insurance
Household Improvement and Maintenance
Mortgage
Property taxes
Rent/Condo Fees
Other

All are separate entries. It would be folly IMO to go into the detailed entry screen and then just enter the one all-encompassing entry of your monthly mortgage payment that includes PITI. Possibly, even find some way to enter PMI if you have it, which can be stopped at some time in the future. I never had PMI so I never tried to find a way to enter it in the Fido calculator.

 

[Koolau]

Essential expenses can be partly discretionary expenses. That car can last longer than expected. My every 5 year car is on year 8.

Heh, heh, my every (?) year cars started with at least 5 years already under their belt(ed) tires. Big savings potential that way, though older cars ARE more prone to need expensive repairs. I'm typically at a point where a major repair may "doom" a car (happened recently with the 21 year old Honda.) YMMV

 

[PatrickA5]

Couple of questions:

Can the tables be downloaded into Excel? I didn't see any way to do it. It would be nice to use as a starting point for a more detailed table.

I haven't been putting in any assets other than what I'd use to live on - mainly retirement accounts. Is there a reason to include things like home equity, cars, etc?

 

[Dtail]

Couple of questions:

Can the tables be downloaded into Excel? I didn't see any way to do it. It would be nice to use as a starting point for a more detailed table.

I haven't been putting in any assets other than what I'd use to live on - mainly retirement accounts. Is there a reason to include things like home equity, cars, etc?

Don't know about the Excel question, but one should only include their investment assets, which would be the denominator for a withdrawal rate.
One would not for example consider that they can withdraw 2k for expenses due to having a 50k car (4% WR).

 

[flyingaway]

The tricky part is the taxes. It is assumed that the calculator will add the taxes automatically and the expenses that you input are after-tax expenses. This has been confirmed here also.

However, if you look at the table, the numbers that you withdraw each year from the portfolio are the ones that you inputted, i.e., after-tax numbers. I would expect that you withdraw expenses plus taxes each year from your portfolio.