best software for financial planning

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skanney
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best software for financial planning

Postby skanney » Fri Dec 21, 2012 2:47 pm

i am looking for the best software to perform a financial plan. i was hoping for something that can do scenario analysis as well as monte carlo simulations and had some measure of asset/liability analysis. does anyone know a good program for that?
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prudent
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Re: best software for financial planning

Postby prudent » Fri Dec 21, 2012 9:25 pm

Could you be more specific? What do you want out of the plan? Retirement income analysis? More?

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Re: best software for financial planning

Postby skanney » Fri Dec 21, 2012 10:57 pm

standard stuff...college planning, spending levels, asset allocation, etc.
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Re: best software for financial planning

Postby livesoft » Fri Dec 21, 2012 11:00 pm

I have never used it, but something like ESPlanner comes to mind.
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Re: best software for financial planning

Postby SGM » Sat Dec 22, 2012 1:50 am

If you are interested in analyzing your portfolio then you can use the xray and portfolio analysis available to morningstar members or free via trowe price.

I use excel spread sheets that I have made up to help me get a rough idea of income and growth with various different scenarios.

There are a huge number of calculators at various web sites that purport to give you asset allocation appropriate for your age and risk tolerance. The same can be said for Roth conversions, and saving for college. I don't pay much attention to these, but maybe some people find them helpful.

I use a twelve year old version of quick books to keep track of business expenses.

I did find http://www.individual401k.com to be helpful for maxing out a solo 401k plan.
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Re: best software for financial planning

Postby prudent » Sat Dec 22, 2012 8:06 am

Check the Wiki page about tools and calculators for some possibilities.
http://www.bogleheads.org/wiki/Tools_and_Calculators

You also need to use caution because I have found results to vary wildly across tools. For example the Fidelity retirement income calculator says I can retire in 2 years based on the desired monthly income I specified and still have a six-figure balance at age 95. On the other hand, the retirement income calculator on my company 401k site says if I retire in 4 years, I will be 30% short of my desired income AND using a shorter life expectancy. This is because the 401k site is not as comprehensive and doesn't support a lot of inputs that are relevant. Now, it wouldn't surprise me if the 401k site is slanted that way on purpose in order to encourage putting more money into the 401k and generate more fees for the 401k custodian.

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Re: best software for financial planning

Postby skanney » Sat Dec 22, 2012 12:51 pm

i've looked at morningstar and naviplan (which uses morningstar). fidelity was no good. the problem with morningstar is their monte carlo for individuals that i could find does not address fat tails in the distribution of returns or really allow for a scenario analysis. they also target terminal wealth and don't tell you the amount you can spend. if i am going to structure my investments, i need to know how much i can spend based upon the allocation. i don't care about how much money i can take to the grave after i die. so i need to change the spending figure for all the scenarios until i get a terminal wealth of zero. then none of it considers fat tails or trending/mean reversion patterns in the actual financial returns. just doesn't reflect reality and does not give me the information i need to match assets vs liabilities.

i did not know that you can access sharpe's financial engines via vanguard from the wiki page. what are his programs like? is there anything else that targets asset/liability matching while considering fat tails and trends in financial returns?
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Bruce
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Re: best software for financial planning

Postby Bruce » Sat Dec 22, 2012 1:47 pm

Hard to beat these planning tools, both for the quality and the price.

http://www.analyzenow.com/Free%20Programs/free_programs.htm

Some very helpful articles also available on Bud Hebeler's website "Analyze Now".


The mission of Analyze Now is to disseminate inexpensive retirement planning tools to educate the user about the realities of retirement planning.

Analyze Now does not sell or promote any securities. It produces and distributes planning papers, booklets, books and software


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prudent
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Re: best software for financial planning

Postby prudent » Sat Dec 22, 2012 2:37 pm

Money Tree Software has some programs designed for use by financial planners that will consider fat tails if you select that option. I have no experience with them personally but they do have a free trial, and you can download the guide free (must provide email address) to see if you think it will meet your requirements.

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Re: best software for financial planning

Postby skanney » Sat Dec 22, 2012 2:55 pm

analyze now only showed scenario analysis capability. they did not even mention fat tails or any sort of simulation.

money tree has goal based and cash flow based approaches. from what i saw of these in naviplan, they really don't target your liabilities and show how your assets move in tandem (or not) with them. the liabilities are considered set for any given monte carlo simulation and the assets move all over the place. but this is not how things work at all in the real world...thanks for the suggestions though...i am checking with financial engines to see what they can do. they are at least reputed to be fairly sophisticated but i do not know what they have in their systems for broad based use. at least the style analysis should be great...
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TomatoTomahto
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Re: best software for financial planning

Postby TomatoTomahto » Sat Dec 22, 2012 3:01 pm

livesoft wrote:I have never used it, but something like ESPlanner comes to mind.

I'm a fan of ESPlanner. Although I've used it for years, i have not plumbed its depths. I use it mostly as confirmation that we're on track. We don't hold back, but we also don't feel the need to consume as much as it says we could.

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Re: best software for financial planning

Postby TomatoTomahto » Sat Dec 22, 2012 3:05 pm

Re Financial Engines: it's free for us at Vanguard, so we use it for a "look see," but ESPlanner is my preference.

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Re: best software for financial planning

Postby skanney » Sat Dec 22, 2012 3:06 pm

oh, i didnt see the esplanner one. let me take a look
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Re: best software for financial planning

Postby skanney » Sat Dec 22, 2012 3:47 pm

esplanner looks interesting. they have monte carlo simulations using what looks like tips as a proxy for liabilities. they don't have fat tails and using scenario analysis seems doable but awkward. without the fat tails the monte carlo similation is a it limited, but they use 95% instead of 90% so maybe that would be a backdoor way of getting there...possible, but i would want to know what financialengines has... if there is anything better, i would certainly want to know though...thanks
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Re: best software for financial planning

Postby SaveStrong » Sat Dec 22, 2012 4:20 pm

firecalc.com?

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Re: best software for financial planning

Postby skanney » Sun Dec 23, 2012 8:16 am

firecalc does not look adequate on its own. does about as much as possible with historical scenarios, but they are very limited, especially if you are young and have a long period. it does not do any sort of simulation to add to the possible outcomes and does not consider how your liabilities might change with inflation. they also don't have data on tips which would be very helpful in hemming in your risk levels. that they are so thorough with scenarios is interesting, but i am not sure exactly what you can do with it.
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Re: best software for financial planning

Postby ourbrooks » Sun Dec 23, 2012 9:58 am

I use http://www.jlplanner.com

It does a good job of handling irregular expenses and income, e.g., "at age 42 we pay off the mortgage."
You can also model things like regular savings, etc.
It does have both Monte Carlo and historical sequence simulations.

I find that tools that focus just on investment returns are less useful since most of the uncertainty I want to evaluate is in savings and expenses, e.g., what if we move to a smaller house.

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Re: best software for financial planning

Postby skanney » Sun Dec 23, 2012 10:34 am

ourbrooks wrote:I find that tools that focus just on investment returns are less useful since most of the uncertainty I want to evaluate is in savings and expenses, e.g., what if we move to a smaller house.


you make a good point. unless you are asset heavy or plan on saving enough to become asset heavy, managing expenses will be more important. i think esplanner does a fairly good job of that though. it looks like they are pretty sophisticated in optimizing how you take social security and they even consider state taxes so you can model downsizing your home to a no tax state. but they also do what seems like a decent job in monte carlo simulations as applied to tips as a proxy for your expenses.

i am looking into Tip$ter, which seems like the best way to model investments, but i am not sure if they model expenses at all. also otar seems interesting. has anyone tried these?
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Peter Foley
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Re: best software for financial planning

Postby Peter Foley » Sun Aug 28, 2016 11:02 am

Reviving an old thread . . .

There are a number of retirement calculators on the BH Wiki, many of which are free. It would be good to know more about these calculators, their uses and their pluses and minuses. Perhaps with a goal of fleshing out the descriptions and ultimately improving the Wiki. I have looked at a few of them and found them to be diverse tools with different purposes. For example, there are retirement savings calculators (how much do I need and how do I get there) and retirement spending calculators (Do I have enough already and how do I maximize spending or total net worth). Some of the calculators provide guidance regarding when to take SS benefits and some only include that factor as an input.

I've looked at ORP, Retiree Model Portfolio, AnalyzeNow, E$Planner Basic, and Charles Schwab

prudent posted the following a few years ago:

Check the Wiki page about tools and calculators for some possibilities.
http://www.bogleheads.org/wiki/Tools_and_Calculators

You also need to use caution because I have found results to vary wildly across tools.


I would invite those who have used any of the calculators to share their experience. I too will chime in if there is interest in the topic

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Re: best software for financial planning

Postby Peter Foley » Mon Aug 29, 2016 4:14 pm

After 24 hours and no replies, here are a couple examples that one might react to:

E$Planner Basic – (Web –basic does not allow for Roth conversions). For the free version data is only saved for 24 hours with access from the same PC. There are details tabs for the results pages that can be downloaded. This is mostly a “do I have enough to retire” planner. Details include projections of annual income from pensions, SS and investments, plus taxes, regular assets, retirement assets and net worth totals for each year one’s projected lifespan. It is a good basic planner. It does not really model scenarios, although it could be run with different inputs to create scenarios. Ranked #1 by Money Magazine according to their web site.

Retiree Model Portfolio – (Excel) This retirement calculator is pretty all inclusive. It creates a base plan which is a “do nothing” plan and holds it for comparison to the plan you design. It models Roth conversion and withdrawal scenarios. Its modeling capabilities are superior to the other calculators I reviewed. By changing a Roth conversion plan you can see the impact on current taxes and tax rates, future tax rates based on projected RMDs, break even dates for conversions, the impact of paying for conversion from after tax investments. All of this is compared to the base plan. The output from this calculator is a number of tables with a tremendous amount of data. It really takes some study to understand the consequences of what one is proposing, but there is a lot of “there” there. While you can save a number of scenarios within the same spreadsheet (say covert Roths to the top of the 15% bracket versus convert Roth to the top of the 25% bracket), I found it easier to create separate scenarios one at a time and save them with specific file names. Some knowledge of Excel is helpful to get the most from this calculator.

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Re: best software for financial planning

Postby sixtyforty » Mon Aug 29, 2016 4:21 pm

What did you think of ORP ?

I'm just getting started with the planning tools and am currently looking at ORP, Firecalc and CFireSim. As you mentioned they all seem to have their strong & weak points.

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Re: best software for financial planning

Postby TimeRunner » Mon Aug 29, 2016 7:12 pm

E$Planner Basic - I did see a Roth conversion section, under My Assets, Retirement Accounts, that asked for: Enable converting my IRA to Roth IRA ?
Start Roth conversion in year ? End Roth conversion in year ? Conversion amount ? Conversion percentage ? . It doesn't give the user an option to vary conversion amounts by year, and I don't know what amount vs percentage means. The help pop-ups didn't work for me.

This webpage shows how to model a conversion in the paid version, but only covers one year: http://esplanner.com/case-studies/convert-your-ira-roth

The problem I've run into is that to model multiple years in the paid version, you have to fill a table of special withdrawals for the amount you want to put into the Roth from your IRA for each year, telling the program it's taxable at ordinary income rate. Then you fill a table of Roth contributions by year. Run the program, see the results. For any given year, return to the withdrawal table and change the amount, then change the corresponding amount of the Roth contribution for that year. Rinse and repeat as necessary. For each year you make a special withdrawal, it overrides the overall program logic which normally attempts to smooth consumption (total discretionary amount you have available to spend each year) over your consuming years (which you tell it...eg. age 62-95 for me, x-y for spouse). In a sense, modeling a Roth conversion in the program fights against the larger logic that is trying to smooth consumption. It is not an optimizer like I-ORP, and it will want to draw down one type of account before moving onto the next, whereas I-ORP will optimize across multiple account types (what I-ORP calls tax deferred (e.g. IRA, 401(k), etc), Roth IRA, and After-tax (eg. savings, investment accounts, etc)). You can change the draw-down order, but not draw across multiple account types UNLESS you again put those in as special withdrawals, which again overrides the smoothing which is one of the main features of the program.

The thought occurred to me that you could start with I-ORP to get an optimized Roth conversion, take the output and use it as starting inputs for ESPlanner special withdrawals from IRAs and corresponding contributions to Roths, see how it shakes out, and then refine in ESPlanner. However, it's a lot of work and while you end up with a pretty plan, nothing ever goes to plan. Sometimes it's just better to know you're going North than trying to pin it down to 359.995 degrees on the Compass.

I think ESPlanner (paid version) gives you a lot of pretty pages of plans, but it's just one path of many futures, and you have to renew the software every year to get the latest SS, fed and state tax rates, and other changes. Some people find it very valuable, and I suppose some financial planners license it for client reports. I've looked at enough reports to know that the more inputs you have, the more inputs are constantly changing, and therefore the outputs will be constantly changing as well. I would have trouble recommending it, particularly the Plus version (since there are plenty of other ways you can model Monte Carlo for free), but for every person holding my opinion, there's probably someone else who raves about it, so...FWIW, YMMV. It's Windows, with a retro GUI and an MDB data store. It could all be done as a web service, but they haven't done that yet.

OK, hope this helps, and I look forward to the contributions of others.
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Re: best software for financial planning

Postby TomatoTomahto » Mon Aug 29, 2016 8:23 pm

TimeRunner wrote:for every person holding my opinion, there's probably someone else who raves about it

I guess that would be me. I find it interesting, and worth paying the annual fee. I don't rave about it, but I use it.

ETA: Years ago I tried the free version, couldn't make heads or tails of it.

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Re: best software for financial planning

Postby Peter Foley » Mon Aug 29, 2016 8:28 pm

Time Runner wrote:
E$Planner Basic - I did see a Roth conversion section, under My Assets, Retirement Accounts, that asked for: Enable converting my IRA to Roth IRA ?


The sections exist in the free version but even when the check box is checked the cells to not accept inputs.

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Re: best software for financial planning

Postby Peter Foley » Mon Aug 29, 2016 8:35 pm

sixtyforty wrote:

What did you think of ORP ?


I started a thread about understanding i-orp logic. https://www.bogleheads.org/forum/viewtopic.php?f=2&t=195644 In short, the program is designed to maximize spending not to fine tune spending with an eye on net worth at the end. It converts one's tax deferred accounts very rapidly paying of lot of taxes up front with the financial return way down the road - perhaps only for one's heirs.

One has to weigh the tax effect of Roth conversion against the tax effect of RMDs at some later point in time. In my estimation orp falls short in this aspect.

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Re: best software for financial planning

Postby frequentT » Mon Aug 29, 2016 9:07 pm

check out Wealthtrace:

https://www.mywealthtrace.com/

I have investigated the program and plan to purchase in Sept.

They offer a free trial period of several weeks.

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Re: best software for financial planning

Postby TimeRunner » Mon Aug 29, 2016 10:01 pm

TomatoTomahto wrote:
TimeRunner wrote:for every person holding my opinion, there's probably someone else who raves about it

I guess that would be me. I find it interesting, and worth paying the annual fee. I don't rave about it, but I use it.

ETA: Years ago I tried the free version, couldn't make heads or tails of it.


I also find it interesting and "mostly" worth paying the annual fee. I just hesitate recommending it to others, because it's $199 (Plus version) and then $70/year, and, seeing the Fidelity vs Vanguard arguments over 1 basis point, I just didn't want to feel responsible for obligating someone else's money. :beer

I had the same issue with the free version, with the Roth conversions section grey'd out. It could be a browser issue, but could also be their website. I would not be surprised if they intended to implement it and didn't get around to it. They are kind of like that. Yet another 'point of hesitation' in recommending the paid version.
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Re: best software for financial planning

Postby ClaycordJCA » Mon Aug 29, 2016 11:14 pm

Those looking for a planner might want to look at the reviews on Darrow Kirkpatrick's blog, caniretireyet.com.

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Re: best software for financial planning

Postby FiveK » Tue Aug 30, 2016 4:16 am

This post: Best and/or Recommended Retirement Calculator seems a good overview.

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Re: best software for financial planning

Postby munemaker » Tue Aug 30, 2016 5:52 am

TomatoTomahto wrote:Re Financial Engines: it's free for us at Vanguard, so we use it for a "look see," but ESPlanner is my preference.


I like Financial Engines, but you have to realize its major limitation. It only plans using your portfolio to your retirement date. Then it assumes you cash in your entire portfolio and buy an annuity. If that is your plan, then yes, it gives good results. Otherwise, it is a bit optimistic.

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Re: best software for financial planning

Postby Diogenes » Tue Aug 30, 2016 11:28 am

frequentT wrote:check out Wealthtrace:

https://www.mywealthtrace.com/

I have investigated the program and plan to purchase in Sept.

They offer a free trial period of several weeks.


At $209, plus a yearly fee of $139, a bit pricey. Also, it seems this involves sending your personal information to the company. I can't consider anything that which does that and is not software resident on my computer, for a variety of reasons. Same issue with Personal Capital. I also would expect the usual sales calls like I received with Personal Capital, which is "free."
I made an exception for Financial Engines because it does a pretty good job and doesn't require identifiable personal information

_D_

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Re: best software for financial planning/ look at Retirees Model Portfolio

Postby Diogenes » Tue Aug 30, 2016 2:56 pm

Peter Foley wrote: Some knowledge of Excel is helpful to get the most from this calculator.



This must have been where I fell short previewing the Retiree's Model Portfolio... :oops:

I wanted to enter different types of accounts (457/403B/) as well as many more of them. Couldn't figure an easy way to do that. Also wanted to delete the 'Inherited IRA' entries, but...?

My ignorance of Excel perhaps shows itself again...

It would be ideal to have a product that is simple and interview-based like Turbotax but that would be oriented to tracking multiple retirement accounts and types for planning Roth conversion timing and RMD strategies. Also no transmission of personally identifiable information to some company who would use it or lose it.

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Re: best software for financial planning/ look at Retirees Model Portfolio

Postby BigFoot48 » Tue Aug 30, 2016 3:59 pm

Diogenes wrote:This must have been where I fell short previewing the Retiree's Model Portfolio... :oops:

I wanted to enter different types of accounts (457/403B/) as well as many more of them. Couldn't figure an easy way to do that. Also wanted to delete the 'Inherited IRA' entries, but...?

There's is a limit to the number of accounts available in the Retiree Portfolio Model. A single taxable, two IRAs, a Roth IRA, a single Roth conversion IRA, and two inherited IRAs. So if one has many accounts they would have to be combined as best possible to fit into those limitations. For example, a recent user and spouse each have an IRA that they wanted to fund two Roth's conversions with. To make the model work they would have to move the conversion amount of one IRA to the other IRA that the conversion will be taken from, then enter the combined yearly conversion amounts. This will also allow the RMD amounts to be correctly calculated for each of their ages.

I also recommend using the macro that clears all of the example entries to start with a clean slate. Makes life so much easier.

It just occurred to me that a couple of inherited Roth IRA accounts might be a good idea to document that great advantage of doing conversions. I'll add it to the list.
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Peter Foley
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Re: best software for financial planning

Postby Peter Foley » Tue Aug 30, 2016 11:15 pm

In the Retiree Model Portfolio, would converting one of the IRAs (the smallest) to an annuity for modeling purposes be a reasonable work around to the single IRA conversion limitation? I tried that as an experiment, setting the annuity payments to equal the RMDs of the smallest IRA and it seemed to work.

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Re: best software for financial planning

Postby BigFoot48 » Tue Aug 30, 2016 11:52 pm

Peter Foley wrote:In the Retiree Model Portfolio, would converting one of the IRAs (the smallest) to an annuity for modeling purposes be a reasonable work around to the single IRA conversion limitation? I tried that as an experiment, setting the annuity payments to equal the RMDs of the smallest IRA and it seemed to work.

That's a clever use of the Immediate Annuity option in duplicating the tax impact of the conversions but it doesn't create the account with the tax-free benefits so I don't think it's a true solution. I would just move a portion of the small IRA to the larger one, and convert the bigger amount. That should get pretty close to the reality of two Roths.
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Re: best software for financial planning

Postby mnnice » Wed Sep 21, 2016 3:04 pm

sixtyforty wrote:What did you think of ORP ?

I'm just getting started with the planning tools and am currently looking at ORP, Firecalc and CFireSim. As you mentioned they all seem to have their strong & weak points.


I played with it for the first time yesterday. I liked the graphs and how it showed different income sources for different periods of retirement. I think it seriously overestimated our social security income :annoyed . While I would love to have 43k in SS at 70 I don't think that will be the case.

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Re: best software for financial planning

Postby FiveK » Wed Sep 21, 2016 4:17 pm

mnnice wrote:I played with it for the first time yesterday. I liked the graphs and how it showed different income sources for different periods of retirement. I think it seriously overestimated our social security income :annoyed . While I would love to have 43k in SS at 70 I don't think that will be the case.
Doesn't ORP use your own input for SS benefits?

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Re: best software for financial planning

Postby sixtyforty » Wed Sep 21, 2016 7:22 pm

FiveK wrote:
mnnice wrote:I played with it for the first time yesterday. I liked the graphs and how it showed different income sources for different periods of retirement. I think it seriously overestimated our social security income :annoyed . While I would love to have 43k in SS at 70 I don't think that will be the case.
Doesn't ORP use your own input for SS benefits?


Yes you can. However, I just went and looked at the site and it appears he has made some changes. Scroll down and click on "Full ORP" . This expands the window where you can enter all the parms. I'm guessing that the first part is if you want a quick calculation while accepting the most common defaults. Personally, I"m glad to see he's still updating and improving it.

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Re: best software for financial planning

Postby FiveK » Wed Sep 21, 2016 7:32 pm

sixtyforty wrote:Yes you can. However, I just went and looked at the site and it appears he has made some changes. Scroll down and click on "Full ORP" . This expands the window where you can enter all the parms. I'm guessing that the first part is if you want a quick calculation while accepting the most common defaults. Personally, I"m glad to see he's still updating and improving it.

According to ORP Parameter Help Document - Social Security,
If you are not yet receiving Social Security benefits then estimate the amount of annual Social Security benefits that you can expect to receive in today's dollars. This is your Primary Insurance Amount (PIA), the amount you will receive at your Full Retirement Age (FRA) as determined by the Social Security Administration.
...
Default: No Social Security benefits are expected.

Unless the documentation is wrong (always possible with any program, let alone a one person effort), the "43k in SS at 70" is coming from a specific SS entry made by you...?

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Re: best software for financial planning

Postby mnnice » Wed Sep 21, 2016 9:36 pm

FiveK wrote:
sixtyforty wrote:Yes you can. However, I just went and looked at the site and it appears he has made some changes. Scroll down and click on "Full ORP" . This expands the window where you can enter all the parms. I'm guessing that the first part is if you want a quick calculation while accepting the most common defaults. Personally, I"m glad to see he's still updating and improving it.

According to ORP Parameter Help Document - Social Security,
If you are not yet receiving Social Security benefits then estimate the amount of annual Social Security benefits that you can expect to receive in today's dollars. This is your Primary Insurance Amount (PIA), the amount you will receive at your Full Retirement Age (FRA) as determined by the Social Security Administration.
...
Default: No Social Security benefits are expected.

Unless the documentation is wrong (always possible with any program, let alone a one person effort), the "43k in SS at 70" is coming from a specific SS entry made by you...?


I put a PIA at my full retirement(67) of 17k. I would guess my yearly PIA at 70 would be more like 21k. My spouse's was also listed way too high as well

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Re: best software for financial planning

Postby BigFoot48 » Wed Sep 21, 2016 11:07 pm

mnnice wrote:I put a PIA at my full retirement(67) of 17k. I would guess my yearly PIA at 70 would be more like 21k. My spouse's was also listed way too high as well

The actual amount depends on the number of years between now and your PIA year, as the COLA rate entered will escalate your entered PIA amount for every year until then.
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Re: best software for financial planning

Postby mnnice » Thu Sep 22, 2016 7:56 am

BigFoot48 wrote:
mnnice wrote:I put a PIA at my full retirement(67) of 17k. I would guess my yearly PIA at 70 would be more like 21k. My spouse's was also listed way too high as well

The actual amount depends on the number of years between now and your PIA year, as the COLA rate entered will escalate your entered PIA amount for every year until then.


But is that how it works IRL?

If someone works from ages 15 to 50 then stops working and claims SS at 70 the PIA grows for 20 years?

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Re: best software for financial planning

Postby BigFoot48 » Thu Sep 22, 2016 8:32 am

mnnice wrote:But is that how it works IRL?

If someone works from ages 15 to 50 then stops working and claims SS at 70 the PIA grows for 20 years?

The PIA is fixed based on the earnings history at the end of employment but does not include the annual inflation adjustments between the end of employment and starting the benefits. The SS Admin does not include that forecast.

For example, when I retired in 1998 at 50 my SS Benefit statement showed an age 62 benefit of $1,060. When I got to 62 and started benefits it was $1,613 as a result of the COLA over 12 years (and a little consulting income that boosted the PIA).
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Re: best software for financial planning

Postby mnnice » Thu Sep 22, 2016 4:37 pm

BigFoot48 wrote:
mnnice wrote:But is that how it works IRL?

If someone works from ages 15 to 50 then stops working and claims SS at 70 the PIA grows for 20 years?

The PIA is fixed based on the earnings history at the end of employment but does not include the annual inflation adjustments between the end of employment and starting the benefits. The SS Admin does not include that forecast.

For example, when I retired in 1998 at 50 my SS Benefit statement showed an age 62 benefit of $1,060. When I got to 62 and started benefits it was $1,613 as a result of the COLA over 12 years (and a little consulting income that boosted the PIA).


Cool I learned something

I noticed a couple of other weird things. It told me we had too much income for aca subsides. Which might be true if we were a two person household since we are a four person family not accurate.

It also says to take money out of tax deferred. We are both shy of 59 1/2?

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Re: best software for financial planning

Postby BigFoot48 » Thu Sep 22, 2016 4:57 pm

mnnice wrote:I noticed a couple of other weird things. It told me we had too much income for aca subsides. Which might be true if we were a two person household since we are a four person family not accurate.

It also says to take money out of tax deferred. We are both shy of 59 1/2?

You might want to email James Welch, the creator of ORP, with those. He's very receptive to fixing, improving or explaining assumptions the model makes. I would say that you can withdraw from tax deferred prior to 59 1/2 penalty free - you just have to jump through some IRS hoops.
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One Ping
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Re: best software for financial planning

Postby One Ping » Fri Sep 23, 2016 1:39 pm

mnnice wrote:
BigFoot48 wrote:
mnnice wrote:I put a PIA at my full retirement(67) of 17k. I would guess my yearly PIA at 70 would be more like 21k. My spouse's was also listed way too high as well

The actual amount depends on the number of years between now and your PIA year, as the COLA rate entered will escalate your entered PIA amount for every year until then.


But is that how it works IRL?

If someone works from ages 15 to 50 then stops working and claims SS at 70 the PIA grows for 20 years?

Hi mnnice,

Yes, that's how it works, IRL.

mnnice wrote:I played with it for the first time yesterday. I liked the graphs and how it showed different income sources for different periods of retirement. I think it seriously overestimated our social security income :annoyed . While I would love to have 43k in SS at 70 I don't think that will be the case.

mnnice wrote:I put a PIA at my full retirement(67) of 17k. I would guess my yearly PIA at 70 would be more like 21k. My spouse's was also listed way too high as well

From a previous post (Aug 2016) you appear to be about 47 years old. That makes your full retirement age 67, giving you 23 years of COLAs to your PIA if claiming at age 70. ORP takes this into account and will use whatever inflation rate you input for COLAs to your PIA. In addition, if you wait to claim until age 70, there is the 24% increase beyond your PIA value due to the 3 year delay beyond FRA.

For example:

‘Current’ (age 47) PIA = $17.4K ($1,450/mo)
.... Inflating @ 3%/year for 20 years to FRA (and assuming no further gains due to additional work)
‘Future’ (age 67, FRA) PIA = $31.4K
.... Inflating @ 3%/year for an additional 3 years to age 70 = $34.34K, plus
.... Delayed Retirement Credits of 24% for claiming at age 70
Age 70 Benefit = $42.6K (QED)

Spousal Benefit (50% of age 70 COLA’d PIA of $34.34K) ~ $17.2K

I second getting in touch with James Welch. He’s been very responsive when I’ve asked him questions.

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Re: best software for financial planning

Postby mnnice » Fri Sep 23, 2016 9:19 pm

Thanks for sharing the math, One Ping. 43k looks about right. :D

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Re: best software for financial planning

Postby One Ping » Fri Sep 23, 2016 10:04 pm

mnnice wrote:Thanks for sharing the math, One Ping. 43k looks about right. :D

No problem. Although I'm sure you realize that unfortunately 43K then is not the same thing as 43K now. :oops:
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