Issue w/Personal Capital vs Vanguard Retirement Planners
Issue w/Personal Capital vs Vanguard Retirement Planners
Late start planning, so I have been playing around with calculators that will allow me access to an easy and visually appealing check up on my progress via iPad (trying to replace PC with iPad). So I have been looking at Personal Capital, or just logging into Vanguard and using their retirement calculator.
So heres the issue I'm running into: Personal Capital's projections have my portfolio value sitting much lower then that of Vanguards's planner given the same variables. Here is what I'm plugging in:
Age: 31
Current portfolio: 1k (eek!)
Yearly contribution: 12,500 (moving forward)
Target Retirement Spending: 45k/year
Hypothetical annual return: 4%
Retirement Age: 65
With these variables Vanguard shows me sitting on ~913.5k. Personal Capital with these same variables shows me sitting on ~465k. Now, I have no idea if Vanguard's calculation includes some fixed amount of social security in with it, however I'm not sure how it would as it does not ask for my income information. I just found such a deviation alarming and would like to find out if it is something I'm overlooking or if some calculators are just inferior to others.
Thanks all, cheers.
Edit: One other question, due to my past ignorance with planning for retirement I have to contribute much of my monthly savings to it now. Due to this, my contributions toward a house down payment is take a huge hit. I'm not sure if it will even amount to much. Would it be bad practice to purchase a home with 0% down (I can utilize VA loan) as long as my retirement is back on track ?
The only other idea I could think of is to halt retirement for one year and bulk up a down payment and then next year switch back over to retirement. Just a little foggy on how I should move forward given the situation and the idea that I would like to purchase a home in the near future (12 years possibly).
So heres the issue I'm running into: Personal Capital's projections have my portfolio value sitting much lower then that of Vanguards's planner given the same variables. Here is what I'm plugging in:
Age: 31
Current portfolio: 1k (eek!)
Yearly contribution: 12,500 (moving forward)
Target Retirement Spending: 45k/year
Hypothetical annual return: 4%
Retirement Age: 65
With these variables Vanguard shows me sitting on ~913.5k. Personal Capital with these same variables shows me sitting on ~465k. Now, I have no idea if Vanguard's calculation includes some fixed amount of social security in with it, however I'm not sure how it would as it does not ask for my income information. I just found such a deviation alarming and would like to find out if it is something I'm overlooking or if some calculators are just inferior to others.
Thanks all, cheers.
Edit: One other question, due to my past ignorance with planning for retirement I have to contribute much of my monthly savings to it now. Due to this, my contributions toward a house down payment is take a huge hit. I'm not sure if it will even amount to much. Would it be bad practice to purchase a home with 0% down (I can utilize VA loan) as long as my retirement is back on track ?
The only other idea I could think of is to halt retirement for one year and bulk up a down payment and then next year switch back over to retirement. Just a little foggy on how I should move forward given the situation and the idea that I would like to purchase a home in the near future (12 years possibly).
Re: Issue w/Personal Capital vs Vanguard Retirement Planners
Standard compounding for those inputs gives close to Vanguard's result after 34 years:
http://www.moneychimp.com/calculator/co ... ulator.htm
http://www.moneychimp.com/calculator/co ... ulator.htm
Re: Issue w/Personal Capital vs Vanguard Retirement Planners
I have never cared much for vanguards retirement planner. All calculators have their quirks, plus gigo.
Check out these instead:
Esplanner
https://basic.esplanner.com/
Cfiresim
http://www.cfiresim.com/
Fidelity income planner
https://www.fidelity.com/calculatorsto ... ncecenter
45k a year means you need 1.125 million. Not a huge fan of zero down payment house purchases, but with the potential for interest rate increases it might make sense.
Check out these instead:
Esplanner
https://basic.esplanner.com/
Cfiresim
http://www.cfiresim.com/
Fidelity income planner
https://www.fidelity.com/calculatorsto ... ncecenter
45k a year means you need 1.125 million. Not a huge fan of zero down payment house purchases, but with the potential for interest rate increases it might make sense.
Last edited by mhalley on Wed Jun 14, 2017 11:16 am, edited 1 time in total.
Re: Issue w/Personal Capital vs Vanguard Retirement Planners
mhalley wrote:I have never cared much for vanguards retirement planner. All calculators have their quirks, plus gigo.
Check out these instead:
Esplanner
https://basic.esplanner.com/
Cfiresim
http://www.cfiresim.com/
Fidelity income planner
https://www.fidelity.com/calculatorsto ... ncecenter
45k a year means you need 1.125 million.
Thanks for the resources.Avo wrote:Standard compounding for those inputs gives close to Vanguard's result after 34 years:
http://www.moneychimp.com/calculator/co ... ulator.htm
Re: Issue w/Personal Capital vs Vanguard Retirement Planners
I think personal capital's retirement planner factors in inflation, but I can't say 100%.
Re: Issue w/Personal Capital vs Vanguard Retirement Planners
Personal capital does report results in today's dollars adjusted for inflation. It also reports the median result and the lowest 10% result of the simulations that it performs.

 Posts: 651
 Joined: Tue Apr 14, 2015 12:07 pm
Re: Issue w/Personal Capital vs Vanguard Retirement Planners
I like ESPlanner (Basic, though I've toyed with the idea of purchasing a version of it) for the consumption smoothing perspective.
I also really like the PC retirement modeler for the variety of cash outlays (and inlays!) you can program into it. It does assume constant returns and inflation, but that's not a huge negative in my book.
OP, regarding the differences you're seeing it must be something to do with programmed assumptions in each of the services. In Excel, the following formula gets me very close to Vanguard's number: =FV(0.04, 35, 12500, 1000, 0). If you're using 4% as real (~nominal  inflation), and then PC is deducting inflation (I believe they default to ~3%) then your number would be much less.
I also really like the PC retirement modeler for the variety of cash outlays (and inlays!) you can program into it. It does assume constant returns and inflation, but that's not a huge negative in my book.
OP, regarding the differences you're seeing it must be something to do with programmed assumptions in each of the services. In Excel, the following formula gets me very close to Vanguard's number: =FV(0.04, 35, 12500, 1000, 0). If you're using 4% as real (~nominal  inflation), and then PC is deducting inflation (I believe they default to ~3%) then your number would be much less.

 Posts: 3595
 Joined: Wed Jan 11, 2017 8:05 pm
Re: Issue w/Personal Capital vs Vanguard Retirement Planners
I also find PersonalCapital to come out low relative to other models. I keep running the Monte Carlo simulation at Portfoliovisualizer, which is inflation adjusted, and get a median of $5M for my investments, while PersonalCapital tells me I only have 70% success rate for an income of $100K including Social Security. I prefer Portfoliovisualizer https://www.portfoliovisualizer.com/mon ... simulation
Re: Issue w/Personal Capital vs Vanguard Retirement Planners
So I have decided to create some spreadsheets of my own, and although I am sure I will continue to revise the structure of them slowly over a period of time I already feel an odd rewarding/liberating sense not depending on a third party app such as Quicken. Anyone else get that?
I did want to ask if how I'm tracking my retirement on it is a good ballpark to go by.
Im using an FV function in order to find what my future value will be with a 4% annual return (after inflation) with an PV of 1000 and compounded at the beginning of each period with an annual contribution of 12500. Here is what I have. By the way I have 34 years left until I'm 65.
FV=(4%/1,34,12500,1000,1)
This puts me with a portfolio of ~$911,947 when I turn 65. Is this correct, and is this a solid way to here on out track my retirement?
Is 4% a rational return to go by?
Thanks
I did want to ask if how I'm tracking my retirement on it is a good ballpark to go by.
Im using an FV function in order to find what my future value will be with a 4% annual return (after inflation) with an PV of 1000 and compounded at the beginning of each period with an annual contribution of 12500. Here is what I have. By the way I have 34 years left until I'm 65.
FV=(4%/1,34,12500,1000,1)
This puts me with a portfolio of ~$911,947 when I turn 65. Is this correct, and is this a solid way to here on out track my retirement?
Is 4% a rational return to go by?
Thanks
Re: Issue w/Personal Capital vs Vanguard Retirement Planners
Keepcalm wrote:So I have decided to create some spreadsheets of my own, and although I am sure I will continue to revise the structure of them slowly over a period of time I already feel an odd rewarding/liberating sense not depending on a third party app such as Quicken. Anyone else get that?
It never, ever occurred to me to do anything other than construct my own spreadsheets for tracking and presentation.
I did want to ask if how I'm tracking my retirement on it is a good ballpark to go by.
Im using an FV function in order to find what my future value will be with a 4% annual return (after inflation) with an PV of 1000 and compounded at the beginning of each period with an annual contribution of 12500. Here is what I have. By the way I have 34 years left until I'm 65.
FV=(4%/1,34,12500,1000,1)
This puts me with a portfolio of ~$911,947 when I turn 65. Is this correct, and is this a solid way to here on out track my retirement?
Is 4% a rational return to go by?
This is the wrong method to apply to this problem. Investment returns are variable and require a computation of a statistical range of outcomes. There are readily available models for that. Returns are an input which can be handled by compiling a history or actual returns or by inputing distributions of returns to a Monte Carlo simulation. I prefer the argument that using historical returns is a better guess than trying to postulate what the future return distributions look like. FireCalc, CFireSim, and Otar's retirement calculator all use historical data. It is also possible to estimate uncertainties by running a sensitivity study against the inputs. I don't think you can make this problem simpler than this.
Thanks
Re: Issue w/Personal Capital vs Vanguard Retirement Planners
Thats unfortunate because I spent some time on creating a decent spreadsheet yesterday to follow my retirement plan progress and used FV PV and PMT to pretty much structure it.
Thanks for the heads up however.
Thanks for the heads up however.
Re: Issue w/Personal Capital vs Vanguard Retirement Planners
Dear Keepcalm,
I actually think that your method is fine and is a good start for where you are in the process. I think I have created a similar spreadsheet to the one you created at some point during my personal path, at a time I was older than you. I still use it 12.5 years later.
I plugged your numbers in my spreadsheet assuming 4% real return (and using only real  inflation adjusted) numbers, and I do get 894483. The very small difference between that and the calculator Avo suggests is that my spreadsheet assumes that the contribution is throughout the year, not at the beginning of the year. Note that this assumes that your $12,500 contribution per year for 34 years will be inflation adjusted too.
I also used 4% real return in my initial planning
Whether this is realistic or not depends on your allocation of stocks and bonds. At your stage, I did go all stocks.
With about $900K at the end of 34 years, I think that drawing $45K is too optimistic, so your plan is currently fragile.
I would not plan to draw more than 4% per year, and lower than that if possible.
A question I have for you is  what is your income base? Do you see some future growth in income in real terms that will allow you to increase your yearly contributions beyond inflation?
When I was your age, we put everything toward getting our home, which we managed to do with 20% down payment when I was 34. We only started investing beyond purchasing a house when I was 35. It worked very well for us. You have time and incomewise, my experience is that things get better over time if you are oriented that way.
Best wishes,
4803.
I actually think that your method is fine and is a good start for where you are in the process. I think I have created a similar spreadsheet to the one you created at some point during my personal path, at a time I was older than you. I still use it 12.5 years later.
I plugged your numbers in my spreadsheet assuming 4% real return (and using only real  inflation adjusted) numbers, and I do get 894483. The very small difference between that and the calculator Avo suggests is that my spreadsheet assumes that the contribution is throughout the year, not at the beginning of the year. Note that this assumes that your $12,500 contribution per year for 34 years will be inflation adjusted too.
I also used 4% real return in my initial planning
Whether this is realistic or not depends on your allocation of stocks and bonds. At your stage, I did go all stocks.
With about $900K at the end of 34 years, I think that drawing $45K is too optimistic, so your plan is currently fragile.
I would not plan to draw more than 4% per year, and lower than that if possible.
A question I have for you is  what is your income base? Do you see some future growth in income in real terms that will allow you to increase your yearly contributions beyond inflation?
When I was your age, we put everything toward getting our home, which we managed to do with 20% down payment when I was 34. We only started investing beyond purchasing a house when I was 35. It worked very well for us. You have time and incomewise, my experience is that things get better over time if you are oriented that way.
Best wishes,
4803.
Re: Issue w/Personal Capital vs Vanguard Retirement Planners
Awesome feedback. I actually just posted another thread specifically for this Excel question as I thought the title of this thread (my original question) was blocking potential views. So if a moderator reads this and sees my other post as well please note the reasoning I did so.4803 wrote:Dear Keepcalm,
I actually think that your method is fine and is a good start for where you are in the process. I think I have created a similar spreadsheet to the one you created at some point during my personal path, at a time I was older than you. I still use it 12.5 years later.
I plugged your numbers in my spreadsheet assuming 4% real return (and using only real  inflation adjusted) numbers, and I do get 894483. The very small difference between that and the calculator Avo suggests is that my spreadsheet assumes that the contribution is throughout the year, not at the beginning of the year. Note that this assumes that your $12,500 contribution per year for 34 years will be inflation adjusted too.
I also used 4% real return in my initial planning
Whether this is realistic or not depends on your allocation of stocks and bonds. At your stage, I did go all stocks.
With about $900K at the end of 34 years, I think that drawing $45K is too optimistic, so your plan is currently fragile.
I would not plan to draw more than 4% per year, and lower than that if possible.
A question I have for you is  what is your income base? Do you see some future growth in income in real terms that will allow you to increase your yearly contributions beyond inflation?
When I was your age, we put everything toward getting our home, which we managed to do with 20% down payment when I was 34. We only started investing beyond purchasing a house when I was 35. It worked very well for us. You have time and incomewise, my experience is that things get better over time if you are oriented that way.
Best wishes,
4803.
Moving on, how would I begin to adjust my 12500/yearly contribution for inflation? Would I just take 2% off that and input 12250 which is 12500(12500*.02) and use that in my FV formula?
So if I adjust my contribution for inflation as I just mentioned above, and since I'm already adjusting for inflation by using only a 4% return on the actual compounding, wouldn't everything be accounted for in the since that that the results would be an accurate reflection of what the money is worth 34 years from now? Or am I still disconnected from understanding this?
Also, you mentioned my plan is on the fragile side. I'm basing the 45k off a 20 year retirement versus going by the 4% rule. Is this a bad practice? To me 85 seemed like a realistic number to off off.
Thank you.
Re: Issue w/Personal Capital vs Vanguard Retirement Planners
Dear Keepcalm,
My spreadsheet contains both the yearbyyear inflation adjusted numbers as well as the actual numbers as the years progress.
On the "planning" side of the spreadsheet, I only work with inflation adjusted numbers anchored to the year I started my plan (in my case 2005).
One of the columns is the inflation percentage since the start (2005).
I assume that additional funding through the years are invested in the middle of the year.
On the "actual" side of the spreadsheet, I use contemporary (actual) numbers, but they are adjusted automatically by the spreadsheet to the "planning" side of the spreadsheet based on the inflation percentage since the start for the year.
In essence, I would like a certain draw inflationadjusted to 2005 (in my case) regardless of what the inflation is. If you want, changing one number can adjust the spreadsheet to the Consumer Price Index value at whatever date you are interested in. See http://eyebonds.info/tips/cpi/cpibig_06.html for the index through the years.
Regarding whether 85 is a good age to plan to die  well, I guess it depends on your age
At 31, 85 looks like a long time in the future, and it is. But when you will be 75, 10 years into your retirement, I am not sure how you would feel about your plan assuming you have only 10 more years. BTW  just checked and life expectancy in the US at 65 is slightly over 20 years, which means there is a decent chance that if you make it to 65, you will make it beyond 85.
Best wishes,
4803.
My spreadsheet contains both the yearbyyear inflation adjusted numbers as well as the actual numbers as the years progress.
On the "planning" side of the spreadsheet, I only work with inflation adjusted numbers anchored to the year I started my plan (in my case 2005).
One of the columns is the inflation percentage since the start (2005).
I assume that additional funding through the years are invested in the middle of the year.
On the "actual" side of the spreadsheet, I use contemporary (actual) numbers, but they are adjusted automatically by the spreadsheet to the "planning" side of the spreadsheet based on the inflation percentage since the start for the year.
In essence, I would like a certain draw inflationadjusted to 2005 (in my case) regardless of what the inflation is. If you want, changing one number can adjust the spreadsheet to the Consumer Price Index value at whatever date you are interested in. See http://eyebonds.info/tips/cpi/cpibig_06.html for the index through the years.
Regarding whether 85 is a good age to plan to die  well, I guess it depends on your age
At 31, 85 looks like a long time in the future, and it is. But when you will be 75, 10 years into your retirement, I am not sure how you would feel about your plan assuming you have only 10 more years. BTW  just checked and life expectancy in the US at 65 is slightly over 20 years, which means there is a decent chance that if you make it to 65, you will make it beyond 85.
Best wishes,
4803.