FIREcalc vs. Personal Capital

[Thomas3857]

Hi all - ran the same simulations on FIREcalc and Personal Capital and my FIREcalc score was 100 but with the same data my PC score was 46. I checked the input data numerous times and my inputs are identical. Can only assume the there are different assumptions built into each program. Anybody else run into this? Thx

 

[Time2]

Hi all - ran the same simulations on FIREcalc and Personal Capital and my FIREcalc score was 100 but with the same data my PC score was 46. I checked the input data numerous times and my inputs are identical. Can only assume the there are different assumptions built into each program. Anybody else run into this? Thx

Is personal Capital a free app? Do you need to sign up? That's all I'm seeing.

 

[Lawrencewendall]

Check again. Firecalc and PC are within 1% for me. SOMETHING is different.

 

[Lawrencewendall]

Is personal Capital a free app? Do you need to sign up? That's all I'm seeing.

I think their app sucks. I use their free browser version since 2016. Just make sure you put in the IRS 1-800 number as your number or they will ring your phone off the hook trying to sell their FA service.

Yes, you do need to sign up and connect your accounts so it can do it's magic but just chose the free version.

I'm a big fan of their retirement planner and monthly/annual dividend earnings feature.

 

[MuirWannabe]

PC is a Monte Carlo calculator. The default firecalc is most definitely not, although you can turn it into a Monte Carlo calculator with an option. So, that can explain a big difference, depending on how you ran them. Probably had other differences as well. PC only knows about the accounts you link. Firecalc takes the egg amount you input. Obviously if those differ, results differ.

 

[Ready]

I can’t help but think that Personal Capital uses an algorithm that causes a much higher failure rate than Firecalc so that they can convince you that you need their fee based advisory services.

Granted, PC is Monte Carlo based whereas Firecalc just uses historical data.

 

[cat4ever]

Are taxes handled differently

I get 100% easily in FireCalc but only 78% in PC. However I notice PC has a setting for Effective Tax Rate in their assumptions, which I've set at 20%. Perhaps in PC you aren't supposed to include taxes in your expected spending? The thing that looked odd was my negative cash flow was quite a bit greater than my expected spending each year (see screenshot). All I can figure is they tack on the taxes, assuming you didn't include them in your spending each year, something Firecalc doesn't do.

 

[Exchme]

Estimating taxes each year in a Monte Carlo simulation would be a great feature, so +1 for Personal Capital. As far as I can tell, Firecalc makes you just include taxes in your estimate of expenses. If the account balances go up or down dramatically from the current level, then the tax number may not be right. Also, depending on your asset level, state tax situation, etc., IRAs in particular may get slammed with taxes when you take RMDs. In FireCalc, it seems you need to adjust for that yourself, say by increasing expenses or lowering the IRA account balance by your guessed future tax rate.

 

[cat4ever]

As far as I can tell, Firecalc makes you just include taxes in your estimate of expenses..

Yes, that is true, and I assumed PC did too. If PC doesn't make you include taxes it would explain why I, and maybe others, get much poorer results under the PC simulation.

 

[Markola]

Yes, that is true, and I assumed PC did too. If PC doesn't make you include taxes it would explain why I, and maybe others, get much poorer results under the PC simulation.

Bummer. I’ve used the free PC planner for maybe 5 years but today when I opened the app I got a pop up. I mostly ignored it but it said something about it being my anniversary, so it’s time to set an appointment with a PC advisor. I’m not interested in that. I skipped that pop up and now the whole Retirement Planner no longer appears on my screen. Easy come, easy go, I guess.

 

[Thomas3857]

Thanks all - I think it's the issue of taxes that is skewing my results. Also, I noticed that PC defaults to 95 year life expectancy while Firecalc defaults to a 30 year period which could be more years in retirement I suppose but in the vast majority of cases much fewer years. Also, I agree with Ready in that PC algorithm likely results in poorer results thus driving people to a "free" consultation with advisor.

 

[tb001]

Thanks all - I think it's the issue of taxes that is skewing my results. Also, I noticed that PC defaults to 95 year life expectancy while Firecalc defaults to a 30 year period which could be more years in retirement I suppose but in the vast majority of cases much fewer years. Also, I agree with Ready in that PC algorithm likely results in poorer results thus driving people to a "free" consultation with advisor.

That’s interesting re the default. That seems like a relatively easy switch and IMO would make firecalc far more intuitive for newer users. Given the majority are looking at ER, it makes a lot more sense than defaulting to 30 yrs.

 

[obsessed]

Bummer. I’ve used the free PC planner for maybe 5 years but today when I opened the app I got a pop up. I mostly ignored it but it said something about it being my anniversary, so it’s time to set an appointment with a PC advisor. I’m not interested in that. I skipped that pop up and now the whole Retirement Planner no longer appears on my screen. Easy come, easy go, I guess.

It still shows up for me but it looks like it was moved from the last time I used it (now under Financial Planning). look there if you haven’t already.

 

[Markola]

It still shows up for me but it looks like it was moved from the last time I used it (now under Financial Planning). You,Ishtar look there if you haven’t already.

Ah, so it does. Thanks a lot!

Well, then, I’ll add that the two calculators I use are PC and Vanguard. Both are Monte Carlo and the results for both are in the same ballpark with the same inputs.

 

[ProGolferWannabe]

Not sure if this helps, but I use PC and know that the figures derived in their retirement planner tack on the necessary taxes needed to meet the required spending levels....so if you state you need $100,000 per year, PC will determine a (presumably) larger withdrawal amount from your nest egg to meet your spending needs and still be able to pay the tax man. One thing I like about PC is that you can set the state you are going to live/retire in, and it adjusts the tax calculation accordingly. Because of the differences between PC and Firecalc, my results don’t match up exactly, but they both seem to give very similar predictions of retirement success.

I had to laugh when some of you thought that PC gives results that show less success in order to induce folks to talk to them about hiring them for financial advice. I thought I was the only person cynical enough to think something like that.

 

[Markola]

One thing I like about PC is that you can set the state you are going to live/retire in, and it adjusts the tax calculation accordingly.

Sure enough. Thanks for the tip. That said, I gained only 1% improvement in my success score by switching from high income tax Minnesota to no income tax Florida, so it makes one wonder if PC is smart enough to include property and sales taxes, etc., which do even the overall tax burden score between the two states.

 

[ProGolferWannabe]

Sure enough. Thanks for the tip. That said, I gained only 1% improvement in my success score by switching from high income tax Minnesota to no income tax Florida, so it makes one wonder if PC is smart enough to include property and sales taxes, etc., which do even the overall tax burden score between the two states.

Yeah..that’s a fair thought....to some degree all of these calculators are like making sausage...you put stuff in, but you don’t really fully understand what went into the processing. I’m not questioning the integrity of the calculators...I’m sure they are all pretty solid in trying to aggregate all the data, mashing it up with historical info, etc. but it is hard to know what was included in the algorithms. But in your case, the numbers seemingly move in the right direction.

 

[Thomas3857]

Not sure if this helps, but I use PC and know that the figures derived in their retirement planner tack on the necessary taxes needed to meet the required spending levels....so if you state you need $100,000 per year, PC will determine a (presumably) larger withdrawal amount from your nest egg to meet your spending needs and still be able to pay the tax man. One thing I like about PC is that you can set the state you are going to live/retire in, and it adjusts the tax calculation accordingly. Because of the differences between PC and Firecalc, my results don’t match up exactly, but they both seem to give very similar predictions of retirement success.

I had to laugh when some of you thought that PC gives results that show less success in order to induce folks to talk to them about hiring them for financial advice. I thought I was the only person cynical enough to think something like that.

I wouldn't be surprised at all if they skew the results to make people think "crap, I need some help here" and give them a call but in general I'm cynical as well.

 

[kingfisher]

I get 100% easily in FireCalc but only 78% in PC. However I notice PC has a setting for Effective Tax Rate in their assumptions, which I've set at 20%. Perhaps in PC you aren't supposed to include taxes in your expected spending? The thing that looked odd was my negative cash flow was quite a bit greater than my expected spending each year (see screenshot). All I can figure is they tack on the taxes, assuming you didn't include them in your spending each year, something Firecalc doesn't do.

The difference is due to tax. PC makes the following assumptions:
1. If the money is coming off of taxable, then your basis is 50% of the value.
2. taxable cap gain tax is assumed to be 7.5%
3. if the money is coming out of IRA/401k, then it assumes 20% tax
4. it probably calculates state tax somewhere too

detail is here: https://www.personalcapital.com/assets/whitepapers/Personal_Capital_Retirement_Planner.pdf

 

[ncbill]

Again, I'v found Fidelity's retirement calculator to be the most conservative by choosing the "markets significantly worse than average" option.

 

[Markola]

Until recently, Personal Capital captured all interest and dividends as an income category in the Banking function, which was nice. It’s gone away now for me. Premium feature or something?

 

[Lawrencewendall]

Until recently, Personal Capital captured all interest and dividends as an income category in the Banking function, which was nice. It’s gone away now for me. Premium feature or something?

I saw the same thing. This was a nice feature which caused me to rely on PC. Since that aspect has gone away (at least for now), I dug around in FIDO more and found a similar feature under "Performance" then "Details" Not as nice as PC's but it will do.

 

[Lawrencewendall]

Just found this. Monthly dividends now show up again.

"If you would like to include these transactions as part of Cash Flow, you can disable this option in your Settings section by unchecking it."

Investment Income, Dividends Received, and Advisory Fees not showing in Cash Flow.


Our Cash Flow view represents both your cash inflows and outflows in order to show you your net cash flow for purpose of spending. Cash inflows include the following: Salaries and interest from savings accounts.

To create a more accurate picture of your cash flow, by default, Investment Income, Dividends, and Advisory fee transactions are no longer included. In most cases, they will be reinvested and are not part of spendable income.

If you would like to include these transactions as part of Cash Flow, you can disable this option in your Settings section by unchecking it.



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