The Flexible Retirement Planner

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
calqueuelater
Posts: 9
Joined: Fri Feb 03, 2012 10:58 pm

The Flexible Retirement Planner

Post by calqueuelater » Wed Jan 17, 2018 9:17 am

Good Morning - Longtime lurker and infrequent poster here. I am familiar with many of the free financial tools often referenced on the site (i.e. FIRECalc), but was wondering whether any posters are familiar with The Flexible Retirement Planner? I have been using it to model out different financial scenarios and find it fairly user friendly; don't know if there are any cautions or drawbacks I should be aware of. Any insights would be appreciated.

User avatar
willthrill81
Posts: 6572
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: The Flexible Retirement Planner

Post by willthrill81 » Wed Jan 17, 2018 11:40 am

It seems that the Monte Carlo analysis used in the software does not incorporate mean reversion; few MC tools do.

This is a significant drawback because it is now understood that MC analysis overstates the 'tails' of return distributions (i.e. it predicts more very good sequences and very poor sequences than the historic record implies should exist). Consequently, when compared to the historic record, the results of MC analysis will likely lead you to a more conservative conclusion than otherwise. Some view this as a real problem, others argue that an extra measure of conservatism is warranted. It's up to you to determine what to use and how to use it.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Dinosaur Dad
Posts: 125
Joined: Wed Feb 22, 2017 6:05 pm
Location: Connecticut

Re: The Flexible Retirement Planner

Post by Dinosaur Dad » Wed Jan 17, 2018 11:57 am

willthrill81 wrote:
Wed Jan 17, 2018 11:40 am
It seems that the Monte Carlo analysis used in the software does not incorporate mean reversion; few MC tools do.

This is a significant drawback because it is now understood that MC analysis overstates the 'tails' of return distributions (i.e. it predicts more very good sequences and very poor sequences than the historic record implies should exist). Consequently, when compared to the historic record, the results of MC analysis will likely lead you to a more conservative conclusion than otherwise. Some view this as a real problem, others argue that an extra measure of conservatism is warranted. It's up to you to determine what to use and how to use it.
willthrill81: I have played with a bunch of retirement calculators including those at Fidelity, I-orp, Personal Capital, New Retirement, etc. Are you saying that this drawback is inherent in ALL Monte Carlo simulations (i.e., the underlying math)? Is there a specific piece of research you've found on this? Pretty significant issue for those of us using this output in planning.
"Take calculated risks - that is quite different from being rash." | General George S. Patton

Dinosaur Dad
Posts: 125
Joined: Wed Feb 22, 2017 6:05 pm
Location: Connecticut

Re: The Flexible Retirement Planner

Post by Dinosaur Dad » Wed Jan 17, 2018 11:58 am

Dinosaur Dad wrote:
Wed Jan 17, 2018 11:57 am
willthrill81 wrote:
Wed Jan 17, 2018 11:40 am
It seems that the Monte Carlo analysis used in the software does not incorporate mean reversion; few MC tools do.

This is a significant drawback because it is now understood that MC analysis overstates the 'tails' of return distributions (i.e. it predicts more very good sequences and very poor sequences than the historic record implies should exist). Consequently, when compared to the historic record, the results of MC analysis will likely lead you to a more conservative conclusion than otherwise. Some view this as a real problem, others argue that an extra measure of conservatism is warranted. It's up to you to determine what to use and how to use it.
willthrill81: I have played with a bunch of retirement calculators including those at Fidelity, I-orp, Personal Capital, New Retirement, etc. Are you saying that this drawback is inherent in ALL Monte Carlo simulations (i.e., the underlying math)? Is there a specific piece of research you've found on this? Pretty significant issue for those of us using this output in planning.
OK duh I see you linked the article. Apologies.
"Take calculated risks - that is quite different from being rash." | General George S. Patton

User avatar
willthrill81
Posts: 6572
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: The Flexible Retirement Planner

Post by willthrill81 » Wed Jan 17, 2018 11:59 am

Dinosaur Dad wrote:
Wed Jan 17, 2018 11:57 am
willthrill81 wrote:
Wed Jan 17, 2018 11:40 am
It seems that the Monte Carlo analysis used in the software does not incorporate mean reversion; few MC tools do.

This is a significant drawback because it is now understood that MC analysis overstates the 'tails' of return distributions (i.e. it predicts more very good sequences and very poor sequences than the historic record implies should exist). Consequently, when compared to the historic record, the results of MC analysis will likely lead you to a more conservative conclusion than otherwise. Some view this as a real problem, others argue that an extra measure of conservatism is warranted. It's up to you to determine what to use and how to use it.
willthrill81: I have played with a bunch of retirement calculators including those at Fidelity, I-orp, Personal Capital, New Retirement, etc. Are you saying that this drawback is inherent in ALL Monte Carlo simulations (i.e., the underlying math)? Is there a specific piece of research you've found on this? Pretty significant issue for those of us using this output in planning.
I think there are a handful of MC simulators out there that do incorporate mean reversion, but I cannot recall them off the top of my head.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

User avatar
corn18
Posts: 1082
Joined: Fri May 22, 2015 6:24 am

Re: The Flexible Retirement Planner

Post by corn18 » Wed Jan 17, 2018 12:01 pm

I have been using FRP for 3 years now. It's a tool that I like and it is very flexible. I find it useful for modeling many different scenarios to stress test my retirement plan. (SS, pension, pay off house, higher inflation, different returns, varying savings rates, etc...) It is the only model I have that accounts for everything in one place, which is nice. I don't use Firecalc as I feel it is redundant to FRP. As I get closer to retirement, I refine the inputs and monitor the outputs.

I also have a spreadsheet I use that is less complex.

And I have a simple 25 x expenses number.

The mosaic of the three inputs reveals that all of them are close enough to validate my approach to retirement savings.

2015
Posts: 2187
Joined: Mon Feb 10, 2014 2:32 pm

Re: The Flexible Retirement Planner

Post by 2015 » Wed Jan 17, 2018 12:09 pm

I'm not sure everyone agrees with the Kitces post. See this thread:

viewtopic.php?f=10&t=222695&sid=ef201ab ... 132cfc0c29

User avatar
willthrill81
Posts: 6572
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: The Flexible Retirement Planner

Post by willthrill81 » Wed Jan 17, 2018 12:11 pm

2015 wrote:
Wed Jan 17, 2018 12:09 pm
I'm not sure everyone agrees with the Kitces post. See this thread:

viewtopic.php?f=10&t=222695&sid=ef201ab ... 132cfc0c29
When it comes to investing, 100% of the people don't agree on pretty much anything.

Below is an argument I have in favor of the Kitces post.
willthrill81 wrote:
Wed Jul 05, 2017 6:39 pm
There is a substantial difference between historical performance and most MC simulations. 6.3% of the MC simulations being worse than 100% of the historical periods is a major statistical anomaly. Given that history represents past reality, many, including me, give it more credence than most MC simulations. Of course it's possible that the worst years the stock market will ever see are in front of us, but we don't know that with any certainty. Some of the MC trials look like end-of-the-world scenarios (i.e. 30 nearly straight years of declining stocks) that would be virtually impossible to guard against.
Further, mean reversion is a well documented phenomenon across time and geography and should be incorporated into any serious projection of future potential returns.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

2015
Posts: 2187
Joined: Mon Feb 10, 2014 2:32 pm

Re: The Flexible Retirement Planner

Post by 2015 » Wed Jan 17, 2018 12:19 pm

willthrill81 wrote:
Wed Jan 17, 2018 12:11 pm
2015 wrote:
Wed Jan 17, 2018 12:09 pm
I'm not sure everyone agrees with the Kitces post. See this thread:

viewtopic.php?f=10&t=222695&sid=ef201ab ... 132cfc0c29
When it comes to investing, 100% of the people don't agree on pretty much anything.

...
willthrill81 wrote:
Wed Jul 05, 2017 6:39 pm
Well I agree 100% with your statement above! :D. My thinking mirrors that of Rob S in the comments section of the Kitces post:
A very interesting study. I think the moral here is that we shouldn’t expect these models to predict the range of outcomes with much accuracy. We are taking historical economic data that is influenced by countless sources including tough decisions by the Federal Reserve and compressing that into two numbers (mean and variance). The author has some useful guidance on how the Monte Carlo outcomes appear to deviate from the historical record that is being modeled. Every simulation result should be interpreted with a grain of salt in the context of how reliable the model is.

There is a tendency for modelers to fall in love with their models and expect more than is reasonable from them. The statistician George Box put it best: “All models are wrong, but some are useful.”

Admiral
Posts: 1466
Joined: Mon Oct 27, 2014 12:35 pm

Re: The Flexible Retirement Planner

Post by Admiral » Wed Jan 17, 2018 12:47 pm

calqueuelater wrote:
Wed Jan 17, 2018 9:17 am
Good Morning - Longtime lurker and infrequent poster here. I am familiar with many of the free financial tools often referenced on the site (i.e. FIRECalc), but was wondering whether any posters are familiar with The Flexible Retirement Planner? I have been using it to model out different financial scenarios and find it fairly user friendly; don't know if there are any cautions or drawbacks I should be aware of. Any insights would be appreciated.
I have used it for about three years and like it very much. I love the ability to change parameters at a granular level and to change things like return and inflation rates over specific periods of time (like having one return rate during accumulation phase and another one during retirement, reflecting a more conservative asset allocation.)

It's a powerful tool, but again it's only as good as its assumptions (which are yours). As for whether, in general, MC simulators are too conservative...that may be so. But it's much better than the opposite. I think it is a very useful guide to give one a range of possibilities. One of the things I like best is the "Goal Seek" section, which models how much you need to save to retire with a certain future withdrawal rate; what rate of return you need to meet a specific spending/portfolio target, and so on.

calqueuelater
Posts: 9
Joined: Fri Feb 03, 2012 10:58 pm

Re: The Flexible Retirement Planner

Post by calqueuelater » Wed Jan 17, 2018 2:14 pm

Thanks to all for their replies, particularly Admiral and corn18. They are helpful and appreciated.

JoeRetire
Posts: 1698
Joined: Tue Jan 16, 2018 2:44 pm

Re: The Flexible Retirement Planner

Post by JoeRetire » Wed Jan 17, 2018 3:35 pm

2015 wrote:
Wed Jan 17, 2018 12:09 pm
I'm not sure everyone agrees...
This is pretty much always correct.

User avatar
WoodSpinner
Posts: 523
Joined: Mon Feb 27, 2017 1:15 pm

Re: The Flexible Retirement Planner

Post by WoodSpinner » Wed Jan 17, 2018 3:43 pm

calqueuelater wrote:
Wed Jan 17, 2018 9:17 am
Good Morning - Longtime lurker and infrequent poster here. I am familiar with many of the free financial tools often referenced on the site (i.e. FIRECalc), but was wondering whether any posters are familiar with The Flexible Retirement Planner? I have been using it to model out different financial scenarios and find it fairly user friendly; don't know if there are any cautions or drawbacks I should be aware of. Any insights would be appreciated.
OP,

I have been using it for about a year and have built some very detailed models for my retirement planning. Personally, I think it works really well and gives you a great amount of control.

Of course, it’s up to you to figure out the input, but the tool has worked well for me.

Did you have any specific questions?

WoodSpinner 8-)

calqueuelater
Posts: 9
Joined: Fri Feb 03, 2012 10:58 pm

Re: The Flexible Retirement Planner

Post by calqueuelater » Wed Jan 17, 2018 4:19 pm

WoodSpinner wrote:
Wed Jan 17, 2018 3:43 pm
calqueuelater wrote:
Wed Jan 17, 2018 9:17 am
Good Morning - Longtime lurker and infrequent poster here. I am familiar with many of the free financial tools often referenced on the site (i.e. FIRECalc), but was wondering whether any posters are familiar with The Flexible Retirement Planner? I have been using it to model out different financial scenarios and find it fairly user friendly; don't know if there are any cautions or drawbacks I should be aware of. Any insights would be appreciated.
OP,

I have been using it for about a year and have built some very detailed models for my retirement planning. Personally, I think it works really well and gives you a great amount of control.

Of course, it’s up to you to figure out the input, but the tool has worked well for me.

Did you have any specific questions?

WoodSpinner 8-)
No, no specific questions. Have enjoyed using it and the different ways to model and experiment with scenarios. Was really just wanting to confirm that it was a quality product and a reliable tool (given appropriate inputs). Thanks again to all.

2015
Posts: 2187
Joined: Mon Feb 10, 2014 2:32 pm

Re: The Flexible Retirement Planner

Post by 2015 » Wed Jan 17, 2018 7:42 pm

JoeRetire wrote:
Wed Jan 17, 2018 3:35 pm
2015 wrote:
Wed Jan 17, 2018 12:09 pm
I'm not sure everyone agrees...
This is pretty much always correct.
Yep. I was simply--and not too effectively--attempting to point out an earlier, interesting thread on the noted Kitces article. One of my heuristics is to always attempt to combat insidious and ubiquitous confirmation bias. The earlier BH thread provides some interesting perspectives if one is seeking additional POV's.

Diogenes
Posts: 602
Joined: Sat Mar 03, 2012 3:58 pm

Re: The Flexible Retirement Planner

Post by Diogenes » Tue Feb 27, 2018 12:41 pm

Just tried to use it (downloaded version) on a Mac. It prompted some unusual security certificate warnings and a Java warning about the product requesting 'unrestricted access' which the warning said would also include the webcam and microphone.
Not sure why that would be, but it caused me to decide not to run it.

Admiral
Posts: 1466
Joined: Mon Oct 27, 2014 12:35 pm

Re: The Flexible Retirement Planner

Post by Admiral » Tue Feb 27, 2018 1:05 pm

Diogenes wrote:
Tue Feb 27, 2018 12:41 pm
Just tried to use it (downloaded version) on a Mac. It prompted some unusual security certificate warnings and a Java warning about the product requesting 'unrestricted access' which the warning said would also include the webcam and microphone.
Not sure why that would be, but it caused me to decide not to run it.
I have never gotten those warnings (running High Sierra) but MacOS in general does not like Java. It's perfectly safe I've used it for years.

Post your issue here and the owner will respond, he's very active:

http://www.flexibleretirementplanner.com/phpBB3/

Monster99
Posts: 115
Joined: Tue Aug 29, 2017 10:28 am

Re: The Flexible Retirement Planner

Post by Monster99 » Tue Feb 27, 2018 10:28 pm

WoodSpinner wrote:
Wed Jan 17, 2018 3:43 pm
calqueuelater wrote:
Wed Jan 17, 2018 9:17 am
Good Morning - Longtime lurker and infrequent poster here. I am familiar with many of the free financial tools often referenced on the site (i.e. FIRECalc), but was wondering whether any posters are familiar with The Flexible Retirement Planner? I have been using it to model out different financial scenarios and find it fairly user friendly; don't know if there are any cautions or drawbacks I should be aware of. Any insights would be appreciated.
OP,

I have been using it for about a year and have built some very detailed models for my retirement planning. Personally, I think it works really well and gives you a great amount of control.

Of course, it’s up to you to figure out the input, but the tool has worked well for me.

Did you have any specific questions?

WoodSpinner 8-)
Will the tool model RMD withdrawals from the tax defered assets? Or do you need to imput each withdrawal?

User avatar
corn18
Posts: 1082
Joined: Fri May 22, 2015 6:24 am

Re: The Flexible Retirement Planner

Post by corn18 » Tue Feb 27, 2018 11:36 pm

Monster99 wrote:
Tue Feb 27, 2018 10:28 pm

Will the tool model RMD withdrawals from the tax defered assets? Or do you need to imput each withdrawal?
FRP models RMD's for you.

User avatar
WoodSpinner
Posts: 523
Joined: Mon Feb 27, 2017 1:15 pm

Re: The Flexible Retirement Planner

Post by WoodSpinner » Tue Feb 27, 2018 11:42 pm

calqueuelater wrote:
Wed Jan 17, 2018 9:17 am
Good Morning - Longtime lurker and infrequent poster here. I am familiar with many of the free financial tools often referenced on the site (i.e. FIRECalc), but was wondering whether any posters are familiar with The Flexible Retirement Planner? I have been using it to model out different financial scenarios and find it fairly user friendly; don't know if there are any cautions or drawbacks I should be aware of. Any insights would be appreciated.
I used extensively for modeling my plans and understanding risk. I ended up putting detailed entries to build the model.

Do you have specific questions? Or just seeing if anyone is using it?

I think using a deterministic model (Excel) and a Probabalistic model (FRP) are a good approach for gaining an understanding of retirement .

WoodSpinner

User avatar
AtlasShrugged?
Posts: 613
Joined: Wed Jul 15, 2015 6:08 pm

Re: The Flexible Retirement Planner

Post by AtlasShrugged? » Wed Feb 28, 2018 1:26 pm

I have used it for about three years and like it very much.
I used extensively for modeling my plans and understanding risk. I ended up putting detailed entries to build the model.
Woodspinner, Admiral....Is it worth getting the license key? Or is the freeware version with three scenarios good enough? Does the license key unlock further capabilities not present in the freeware version?
“If you don't know, the thing to do is not to get scared, but to learn.”

Admiral
Posts: 1466
Joined: Mon Oct 27, 2014 12:35 pm

Re: The Flexible Retirement Planner

Post by Admiral » Wed Feb 28, 2018 2:17 pm

AtlasShrugged? wrote:
Wed Feb 28, 2018 1:26 pm
I have used it for about three years and like it very much.
I used extensively for modeling my plans and understanding risk. I ended up putting detailed entries to build the model.
Woodspinner, Admiral....Is it worth getting the license key? Or is the freeware version with three scenarios good enough? Does the license key unlock further capabilities not present in the freeware version?
I use the freeware version and have found no limitations. I think it's free for non-commercial use. I have had more than three scenarios modeled at once (I think) so I'm not even sure about that limitation...

User avatar
AtlasShrugged?
Posts: 613
Joined: Wed Jul 15, 2015 6:08 pm

Re: The Flexible Retirement Planner

Post by AtlasShrugged? » Wed Feb 28, 2018 2:29 pm

I use the freeware version and have found no limitations. I think it's free for non-commercial use.
Admiral...I have the freeware version as well. I know it is a hell of a tool, just having a hard time grasping all the different aspects, and fully use the functionality of FRP.
“If you don't know, the thing to do is not to get scared, but to learn.”

User avatar
WoodSpinner
Posts: 523
Joined: Mon Feb 27, 2017 1:15 pm

Re: The Flexible Retirement Planner

Post by WoodSpinner » Thu Mar 01, 2018 12:24 am

AtlasShrugged? wrote:
Wed Feb 28, 2018 1:26 pm
I have used it for about three years and like it very much.
I used extensively for modeling my plans and understanding risk. I ended up putting detailed entries to build the model.
Woodspinner, Admiral....Is it worth getting the license key? Or is the freeware version with three scenarios good enough? Does the license key unlock further capabilities not present in the freeware version?
I got the license key ($20??)—it was a great investment and a good way to pay some back for all of the hard work it took to write and support the tool. I had 11 models going at my max — variations looking at early deaths, stock market crashes, really high inflation etc.

Ended up keeping 3 models up to date....

It’s pretty powerful, but you have to know what to enter and how to interpret. Their support forum is excellent.

Joel

Post Reply