WoodSpinner wrote: ↑Mon May 27, 2019 4:50 pm
BobK, you seem to know quite a bit about this product — are you affiliated with the company? An experienced user?
I gave the link a quick try and ran into some problems from the getgo. For instance, I am already retired (at age 59, in 2018) but it did not let me enter this. Don’t see any details on Fed vs State taxes so not sure what it is doing. Nor any assumptions on inflation.
Also, it is suggesting that I purchase life insurance? Not sure why it would make that recommendation given that I am already retired and my pension and SS benefits continue after I die.
I'm not BobK but have subscribed to ESPlanner, then MaxiFi, for several years, and am familiar with the products.
The basic version of ESPlanner may illustrate the concepts of smooth consumption but has not been improved for several years. It did fairly represent the functionality of the full version of ESPlanner at some point in the past. It does not represent the functionality or improved user interface of the current product, or even the most recent version of the stand-alone ESPlanner, for that matter.
With respect to life insurance, the recommendations are the cash inputs required for the survivor to maintain the (mathematically exact) same level of living standard per adult (LSPA), should the insured die in that year. (Think: loss of earned income, drop to 50% of pension, or SS spousal benefit.) It doesn't consider that a decrease in standard of living may be acceptable to you.
The full version of ESPlanner, which has the same computation engine in the background as does MaxiFi, but is no longer being enhanced, allows you to adjust the life insurance load so the rates match yours. If you set them to 0, that eliminates the cost of insurance as an expense but does not prevent the life insurance suggestion from being calculated.
In comparison, MaxiFi allows the user to adjust the load rate and to enter a stop date separately for each adult. That allows you to adjust the recommended premium to what you'd actually pay, and to impose your own cutoff age. In your case, if you don't want any more insurance, just set the age to 58.
It's still slightly unrealistic in that you cannot force it to consider a level premium over time. I'm over 60 but do want insurance because my wife's living standard would drop if I die right now. The recommended amount tails off a little after age 70. The amounts after 70 are insignificant but not 0.
Realistically, I will get the maximum amount recommended during one of the years during that time because I can't count on being insurable for more later, if required. What I do is set the insurance maximum age at 70, set the calculated premiums to $0, and add a fixed special expense representing my actual premium.
With respect to taxes, details are in the full reports of both ESP and MaxiFi. I doubt the basic version includes that but don't really know. I live in a non-tax state so I don't have experience with the treatment of state taxes, but I know for a fact that they're taken into consideration based on the state where your primary residence is located. (You can record moving multiple times.) Also, state taxes are reported as a separate column in the tax detail
As an illustration I've pasted the headers from the tax report and the tax detail reports below. Because it's large, I added numbers to the columns. The headers are one row in the reports.
1. Year 2. Spouse 1's Age 3. Spouse 2's Age 4. Federal 5. State 6. Spouse 1's FICA 7. Spouse 2's 8. FICA 9. Total
1. Calendar Year 2. Spouse 1 Age 3. Spouse 2 Age 4. Earned Income 5. Capital Gains Income 6. Nominal Asset Income 7. Adjustments to Income 8. Adjusted Gross Income 9. Deductions 10. Exemptions 11. Taxable Income 12. Tax 13. Alternative Minimum Tax 14. Credits 15. Refundable Credits 16. Net Tax
In full disclosure, I am a beta tester for the product and, as is common with other software beta tests, have benefited in the form of having my subscription extended for a few months, for free. Those months of free extension are a small fraction of the years I've paid for, and will continue to pay for, unless and until I find a something better. The opinions expressed here are my own.
edit: struck a word