Quicken Lifetime Planner and FireCalc

[CUinFl]

I have been a user of Quicken Lifetime Planner (QLP) since it's introduction and have modeled in nearly every expense I can think of - or have heard of - as I talk with folks about retirement. To demonstrate, I had modeled in children before they were conceived. . For those wondering, I guessed right on the number of kids, picked the right birth year for one of them, and also was right on one gender guess.

Alright, i know I am a QLP junkie, and assume there are others out there like me (e.g. PB4Uski).

Here is my question, what is the best way to complement QLP modeling with FireCalc? I have tried FireCalc, however, it seems like it is just a second financial tool for me versus something I can use powerfully with all the Quicken data and scenarios I have modeled.

FYI, the reason I ask is that I am one who would like to retire early and conservatively "die broke". It would be nice to have FireCalc take all my QLP inputs and suggest the percent chance I have with the main QLP scenario and assumptions I have modeled.

 

[pb4uski]

As you know, I'm a fan of QLP as well since it is intuitive, easy-to-use and covers a lot of retirement planning basics. I think it is great for people new to retirement planning where FireCalc and other more sophisticated planners can be quite confusing and for people who don't have great spreadsheeting skills to be able to do a DIY retirement plan in Excel.

My main beef with QLP is that it is deterministic rather than stochastic.

The approach I have taken is to do my main plan in QLP and then augment with stochastic planners (Financial Engines, FireCalc, ORP, Vanguard Monte Carlo Retirement nest egg calculator) using the same assumptions that I use in QLP. Since each planner has different inputs, I just try to be as consistent with QLP as I can.

I would love to see QLP add a stochastic analysis, add tax-free funds like Roths (which I think get included in Tax-Deferred) and add reporting and/or Excel output capabilities.

 

[CUinFl]

Thanks pb4uski. I knew you would not let me down.

You nailed my problem on the head.

I would like to think the way I have thought through and modeled into QLP is not "basic", but rather the deterministic approach is. Modeling expenses for a car when my kids are older and wedding expenses 10+ years from now are a few other expense adjustments which complexify a simple modeling transition.

I will research other financial engines and hope that a future release of Quicken adds the stochastic capabilities.

 

[MichaelB]

It is easier to model expenses than predict portfolio returns. Also, over time, it is easier to deal with unplanned expenses than portfolio shock. Volatility has such an impact, at least in my case with no other income streams.

I used quicken financial planner early on and found it gave me a reassuring projection that was mostly undeserved. A Monte Carlo tool was like a bucket of cold water on my early plans. FIRECalc was even more clear and useful because it gave me a better view of the financial risks and helped me model the impact of different portfolio options and volatility.

There is a limit, however, to how much benefit can come from a tool, because real life intervenes. This is not intended as a criticism of CUinFl or the Quicken product, just an acknowledgement that other forces at play are totally beyond our reach or ability to plan.

 

[REWahoo]

... other forces at play are totally beyond our reach or ability to plan.

AKA "The Asteroid School of Retirement Planning".

 

[Ed_The_Gypsy]

Isn't this a matter of one program projecting costs and another program analyzing safe withdrawal rates? Two different animals.

 

[Animorph]

I use deterministic projections for my detailed financial plans. I reconcile it with FIRECalc by requiring a final portfolio value (very large) that results in roughly a 3% maximum portfolio withdrawal after all income sources come online. That simplifies the detailed calculations but maintains the historical safety of FIRECalc.

 

[wanaberetiree]

As you know, I'm a fan of QLP as well since it is intuitive, easy-to-use and covers a lot of retirement planning basics..

I have been Quicken user for ~20 years, and love it, I participated in Intuit's Quicken beta tests for years before 2001, but I must confess I don't feel QLP impresses me as an intuitive calculator. And when I read posts like this one, I am thinking maybe I just don't know how to use it.

Would you guys, QLP fans, like to describe how to properly use QLP?

 

[CUinFl]

A Monte Carlo tool was like a bucket of cold water on my early plans.

There is a limit, however, to how much benefit can come from a tool, because real life intervenes. This is not intended as a criticism of CUinFl or the Quicken product, just an acknowledgement that other forces at play are totally beyond our reach or ability.

Thanks. I did some research today and spent ~4 hours restating expenses income and assumptions into Fidelity's Retirement Income Planner. Not only was it a bucket of cold water thrown in my face, but I think I was slapped in the face a few times with a wet fish. All this hard work, LBMM, accelerating savings and all I get is a few years in retirement under the absolute worse scenario.

Fyi, I Did not take any offense by your comment; nor anyone else's comments. I just wish there was one tool that could integrate stochastic and deterministic approaches, predict the future, solve world hunger, and rub my feet when they are sore. Is that too much to ask?

 

[ERD50]

... FYI, the reason I ask is that I am one who would like to retire early and conservatively "die broke". ....

... Is that too much to ask?

No, there are two ways that I know of to die broke. A crystal ball, or turn a large portion of your portfolio over to an annuity company.

Well, having a doctor give a "Use By" date, or making your own date with a Smith & Wesson are alternates, but that's hopefully not where you were going with your question.

-ERD50

 

[CUinFl]

ERD50,

You took some creative license combining two of my posts into one stream... While incorrect, I applaud the nice touch

CUinFl

 

[ERD50]

ERD50,

You took some creative license combining two of my posts into one stream... While incorrect, I applaud the nice touch

CUinFl

I didn't mean to change the context, apologies if it came across that way. They just seemed like convenient quotes to frame the Q/A.

-ERD50

 

[explanade]

Is there an online version of QLP, since they're supposedly moving personal finance to the web and mint.com?

This article is old but lists a lot of the tools mentioned in this thread, though not FireCalc.

http://www.forbes.com/forbes/2005/0606/092sidebar.html



As does this Bogleheads thread:

http://www.bogleheads.org/forum/viewtopic.php?f=2&t=113928

 

[pb4uski]

Is there an online version of QLP, since they're supposedly moving personal finance to the web and mint.com?....

The only version that I am aware of is the tool that is a part of Quicken Deluxe and higher versions of Quicken.

 

[bUU]

Rebooting this old thread...

I guess my interest is with regard to why these different tools tell such different stories. I use all three, and updated all three yesterday. Fidelity says we're on target. It paints a picture that says we're actually going to leave some significant money to the kids. FireCalc is pretty clear: All the models end above zero, and even the lowest line never dips that far below our 2013 net worth. Quicken Lifetime Planner says we're doomed. We're relatively okay until my spouse passes away, and soon thereafter I'll have to sell our home to afford the remaining 3-5 years of my life - living where? in a shelter?

Is this typical - that the same data is interpreted much more pessimistically in QLP than in the other two tools? Do I just say "two out of three wins"?

 

[pb4uski]

I haven't used Firecalc for a while, but as I recall the average results was similar to QLP using similar assumptions. In fact, I think if anything people get more favorable results under QLP than stochastic planners. See Michael's post #4.

You might want to double check to see that all the assumptions are the same, particularly those after your spouse passes. You could also compare cash flows for certain years to see how different they are.

 

[bUU]

Updated: I actually found one tiny error in my QLP data that messed things up. I'm switching from non-HCE to HCE this coming year, so put the HCE 401k contribution in at the estimated non-HCE percentage from the ADP test plus 2%, but evidently the max-$23k contribution was still there. I don't know how that would mess things up (since it just represent more savings for retirement and more tax advantage than I'm entitled to, and more than FC figured in - I cannot understand why that would make QLP less optimistic than FC instead of more optimistic).

QLP is still showing failure, but I clearly need to go through every last bit of it more closely to see if there is anything else like that.

 

[bUU]

Okay, still no joy. I've gone over the assumptions with a fine-toothed comb to try to find substantial inconsistencies and the corrections I made actually made QLP yet-even more pessimistic.

In order (attachments) QLP, FireCalc, and Fidelity RIP.

 

[pb4uski]

Is there a way you can compare cash flows of, say 2020 (or pick a year), between the three to identify where the differences might be?

 

[bUU]

I can cobble such info together from Quicken (what the heck? - no reporting from QLP?? - that's ridiculous!), but don't see any of getting similar info from FireCalc for comparison. That's not really how FireCalc works, I don't think. It doesn't choose a specific model, like QLP does, but instead gives you a range of models. There is no way to pick out the worst case model (which, remember, succeeds in my case) from FireCalc, and get an income and expense detail from it, as far as I can see.

The "Your Portfolio" portion of FireCalc seems to be the biggest motivator of success or failure. I left the default "Total market" changing only the ER (1.3%) and Fixed Income parameter ("Commercial Paper"). Switching to "consistent annual market growth" with estimates 8.6%/3%/3% paints a picture closer to QLP. But are those estimates right? And if so, why do these two alternative ways of viewing portfolio performance vary so much?

 

[Ready]

I've been a Quicken user for 20 years, and have played with QLP over the years but never found it all that useful. I see a lot of people recommending it in this forum, and I occasionally go back to see what I'm missing. My biggest complaint with it is that I have to plug in the forecasted returns on my investments, rather than using historical data as Firecalc does, or Monte Carlo simulation like other financial calculators.

So of course, when I plug in high values for investment returns (7% or greater), it says I'm going to be giving away millions of dollars to charity when I die. When I drop the rate down to 4%, it pretty much has me spending every last penny. But why do I need QLP for to tell me this? Isn't it obvious that higher returns mean good times ahead, and lean returns mean having to be more frugal? I don't see why I need QLP to tell me this. It just makes common sense to me.

 

[Gatordoc50]

I've been a Quicken user for 20 years, and have played with QLP over the years but never found it all that useful. I see a lot of people recommending it in this forum, and I occasionally go back to see what I'm missing. My biggest complaint with it is that I have to plug in the forecasted returns on my investments, rather than using historical data as Firecalc does, or Monte Carlo simulation like other financial calculators. So of course, when I plug in high values for investment returns (7% or greater), it says I'm going to be giving away millions of dollars to charity when I die. When I drop the rate down to 4%, it pretty much has me spending every last penny. But why do I need QLP for to tell me this? Isn't it obvious that higher returns mean good times ahead, and lean returns mean having to be more frugal? I don't see why I need QLP to tell me this. It just makes common sense to me.

I agree that it's mostly common sense. I take my expected years in retirement multiplied by my annual spending to arrive at my required nest egg. And then invest to keep pace with inflation. If I blow inflation out of the water in a given year, I'll peal off some risk. The planning tools are fun but they can't do your thinking for you.

 

[Options]

I've been a Quicken user for 20 years, and have played with QLP over the years but never found it all that useful. I see a lot of people recommending it in this forum, and I occasionally go back to see what I'm missing. My biggest complaint with it is that I have to plug in the forecasted returns on my investments, rather than using historical data as Firecalc does, or Monte Carlo simulation like other financial calculators.

So of course, when I plug in high values for investment returns (7% or greater), it says I'm going to be giving away millions of dollars to charity when I die. When I drop the rate down to 4%, it pretty much has me spending every last penny. But why do I need QLP for to tell me this? Isn't it obvious that higher returns mean good times ahead, and lean returns mean having to be more frugal? I don't see why I need QLP to tell me this. It just makes common sense to me.

+1 My exact complaint with all deterministic calculators as well.

 

[bUU]

I take my expected years in retirement multiplied by my annual spending to arrive at my required nest egg. And then invest to keep pace with inflation.

I think that's great if you have enough financial resources to limit the utility of gain to no more than keeping up with inflation, but projecting that that's the only way to think about it is akin to saying that 80% of people should simply aim to work until they die.

 

[bUU]

Okay, still no joy.

Okay digging into this a little more this morning, I see that QLP is doing a lot of work that I didn't expect it to do, and because I wasn't expecting it, when I reviewed the data earlier I didn't see it. The numbers looked correct because they are, but I didn't realize what I was seeing was a lot of double counting of expenses.

I included our mortgage payment, and income and property taxes in my estimate of expenses. As far as I can tell, that's the way that FireCalc expects the spending number to be determined. By contrast, I can see in the year-to-year detail that QLP subtracts all those things out, separately, drawing the mortgage pay-down info from the mortgage data in Quicken, itself, and even doing its own estimated calculations of income taxes. It even subtracts out savings, itself.

As you can well imagine, eliminating all that double-counting changes the red light in QLP into a green light, and by a mile. (Whew!)

I need to go back over Fidelity RIP because I see now the advisory there, "Do not include estimated income taxes, however, as they are calculated for you." Though, a quick look-see doesn't give me much confidence that the taxes are calculated and subtracted.