Total Portfolio Allocation and Withdrawal (TPAW)

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Corentin
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Corentin »

Wow, fantastic, thank you both ! I expected some food for thought and you served a five-star menu hot on my plate :happy
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Ben Mathew
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Ben Mathew »

Corentin wrote: Sun Mar 10, 2024 3:32 am Wow, fantastic, thank you both ! I expected some food for thought and you served a five-star menu hot on my plate :happy
Glad you like the meal! What's great is that it wasn't hard to prepare. I think that's the mark of a good model. It extends easily and can illuminate many aspects of a problem. The model of supply and demand does that for economics. The lifecycle model does that for investing.

When you push the SWR model and ask more questions, the results quickly become nonsensical and confusing. When you push the lifecycle model and ask more questions, you often get clarity because the underlying framework rests on solid foundations and the analysis extends easily.
Total Portfolio Allocation and Withdrawal (TPAW)
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corn18
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by corn18 »

I have every model I could find in my massive retirement spreadsheet. All built in and run automatically. Been retired 3 years and the only output I look at these days is from the TPAW model. Total income + total savings - total expenses. If that is positive, I am happy. Really not much more complicated than that, IMHO.

Although I do take one extra step and multiply the excess income by the VPW constant I calculate for spending between now and age 70 when SS kicks in. Gives me an idea of how much more I can spend each year between now and SS.
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Ben Mathew
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Ben Mathew »

corn18 wrote: Sun Mar 10, 2024 6:55 pm I have every model I could find in my massive retirement spreadsheet. All built in and run automatically. Been retired 3 years and the only output I look at these days is from the TPAW model. Total income + total savings - total expenses. If that is positive, I am happy. Really not much more complicated than that, IMHO.

Although I do take one extra step and multiply the excess income by the VPW constant I calculate for spending between now and age 70 when SS kicks in. Gives me an idea of how much more I can spend each year between now and SS.
Thanks for sharing this. Glad you found a process that works for you.
Total Portfolio Allocation and Withdrawal (TPAW)
ahc19081
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by ahc19081 »

Ben Mathew wrote: Sat Mar 09, 2024 11:13 pm You can model variable savings in the current planner with a small hack. You just need to say that you are retired and then enter your income during your working years as an income during retirement.
My concern with this is the very different tax treatment of income during the working years (in our family's case, I expect income taxes to be considerably higher while we are working than when we retire). I guess one could model that using an essential spending item, or attempt to estimate income net of taxes during the working years. Overall I prefer the far more granular approach of ProjectionLab for our income and expenses during our accumulation years, while finding TPAW extremely helpful for an at-a-glance understanding of potential spending capacity in retirement.
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corn18
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by corn18 »

I also have the rich, broke or dead model in my spreadsheet. Keeps me grounded.

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Ben Mathew
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Ben Mathew »

ahc19081 wrote: Mon Mar 11, 2024 6:12 am
Ben Mathew wrote: Sat Mar 09, 2024 11:13 pm You can model variable savings in the current planner with a small hack. You just need to say that you are retired and then enter your income during your working years as an income during retirement.
My concern with this is the very different tax treatment of income during the working years (in our family's case, I expect income taxes to be considerably higher while we are working than when we retire). I guess one could model that using an essential spending item, or attempt to estimate income net of taxes during the working years. Overall I prefer the far more granular approach of ProjectionLab for our income and expenses during our accumulation years, while finding TPAW extremely helpful for an at-a-glance understanding of potential spending capacity in retirement.
Yes, this won't account for taxes. Incorporating taxes is an important item on the list of features we plan to implement. In the meantime, as you mentioned, you can model taxes as an essential spending item or enter income net of taxes during working years.

On the subject of granular income and expense inputs, we have some ideas that we plan to implement. But it would be helpful to think through some concrete use cases. Can you give some examples of the kind of granularity that you find useful?
Total Portfolio Allocation and Withdrawal (TPAW)
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skipper
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by skipper »

I'm in the early stages of trying to decide why TPAW needs expense granularity or any expenses at all. If you add one thing, you would eventually need to add everything, then you end up in RPM territory, which is not what TPAW is about in my estimation. Since Allocation is in the title, it would be nice if the model could accommodate any (reasonable) portfolio mix (or more portfolio mixes), possibly drawing on real time (or delayed) CAGRs or other return metric (as it stands, the model is fixed on your two base Vanguard funds; understandable). To me, this would be infinitely more meaningful (and more fun), if not more accurate. The other title denizen is Withdrawal - knowing how much I can pull from the portfolio to cover ALL expenses, no matter what they are, is the purpose of the model. I could be wrong, but anything other than these two things amount to guesses in the extreme and just introduce more unknown variability. Rebuttals?
by Hyperchicken » Tue Feb 13, 2024 2:28 pm | | ... Dang. That rat and pellet thing is pretty depressing. | Guess I better get back to work.
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corn18
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by corn18 »

I've only ever used the first iteration of the TPAW model and that is what I have in my spreadsheet. My spreadsheet has nominal income by year from 55-99. Not hard to figure this out. It has nominal expenses by year. Pretty straight forward as well. I don't apply a rate of any sort to my expenses because I am already retired and have a good feel for our spending. For savings, I just use the worst 30 year real return. Pretty simple math after that that I put on a chart.

I can adjust income, expenses or savings and see how that affects TPAW output.

Maybe the work I put into filling out the income/expense lines are what the latest model is trying to address. I find it easier to keep them separate.
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Ben Mathew
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Ben Mathew »

skipper wrote: Mon Mar 11, 2024 7:38 pm I'm in the early stages of trying to decide why TPAW needs expense granularity or any expenses at all. If you add one thing, you would eventually need to add everything, then you end up in RPM territory, which is not what TPAW is about in my estimation. Since Allocation is in the title, it would be nice if the model could accommodate any (reasonable) portfolio mix (or more portfolio mixes), possibly drawing on real time (or delayed) CAGRs or other return metric (as it stands, the model is fixed on your two base Vanguard funds; understandable). To me, this would be infinitely more meaningful (and more fun), if not more accurate. The other title denizen is Withdrawal - knowing how much I can pull from the portfolio to cover ALL expenses, no matter what they are, is the purpose of the model. I could be wrong, but anything other than these two things amount to guesses in the extreme and just introduce more unknown variability. Rebuttals?
Income and extra expense flows are necessary inputs in the lifecycle model. Asset allocation and withdrawals would be a function of these flows. So being able to model these flows better would be useful.

The current portfolio balance is assumed to be VT (for stocks) and BND (for bonds) for the purpose of estimating an updated portfolio balance daily. We will expand the list of funds that can be used for this so you can more closely model your actual portfolio. Note that this does not impact the simulation beyond the estimate for the current portfolio balance.
Total Portfolio Allocation and Withdrawal (TPAW)
ConstantChrysalis
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by ConstantChrysalis »

Ben Mathew wrote: Tue Mar 12, 2024 7:00 pm The current portfolio balance is assumed to be VT and BND for the purpose of estimating an updated portfolio balance daily. We will expand the list of funds that can be used for this so you can more closely model your actual portfolio. Note that this does not impact the simulation beyond the estimate for the current portfolio balance.
I'd suggest removing this function rather than continuing to develop it. It is no problem to enter in the actual portfolio balance every month and doing so is more accurate unless someone actually has the funds in their portfolio and in the assumed balanced allocation mix, which I bet rarely if ever happens. It is confusing to have this value change automatically each day, especially for a new user. It makes plan link results non-reproducible. Also, the recommendation is to use a risk-free asset for the allocation, which is best approximated as duration-matched TIPS, and using/seeing BND conflicts/confuses that point.
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Harry Livermore
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Harry Livermore »

ConstantChrysalis wrote: Tue Mar 12, 2024 7:14 pm
Ben Mathew wrote: Tue Mar 12, 2024 7:00 pm The current portfolio balance is assumed to be VT and BND for the purpose of estimating an updated portfolio balance daily. We will expand the list of funds that can be used for this so you can more closely model your actual portfolio. Note that this does not impact the simulation beyond the estimate for the current portfolio balance.
I'd suggest removing this function rather than continuing to develop it. It is no problem to enter in the actual portfolio balance every month and doing so is more accurate unless someone actually has the funds in their portfolio and in the assumed balanced allocation mix, which I bet rarely if ever happens. It is confusing to have this value change automatically each day, especially for a new user. It makes plan link results non-reproducible. Also, the recommendation is to use a risk-free asset for the allocation, which is best approximated as duration-matched TIPS, and using/seeing BND conflicts/confuses that point.
I second this sentiment. I revisit the planner often, using a saved link, and the first thing I do is update the portfolio balance. It's very easy.
Ben, I think if you want to offer some (or many) choices of investments to track, as an advanced feature, that's harmless enough. But I'm guessing it will never include all the individual investments I have, so I'll probably just type in the portfolio balance manually each visit anyway...
At the very least, I would not necessarily prioritize this feature.
Cheers
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Harry Livermore
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Harry Livermore »

OK, knowing your to-do list is long... here is another feature request:
How about the ability to name the plan on the title page of the PDF?
"Harry's Basic Plan"
"Harry Retires At 62, Mrs. Livermore Works To 65"
"Worst Case Plan- Harry Is Involuntarily Retired Right Now"
etc...
I have a few of them going, and I have been naming the files in this manner, but it would be pretty slick to have it on the title page instead of "Retirement Plan"...
Cheers
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skipper
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by skipper »

Harry Livermore wrote: Wed Mar 13, 2024 5:42 pm OK, knowing your to-do list is long... here is another feature request:
How about the ability to name the plan on the title page of the PDF?
"Harry's Basic Plan"
"Harry Retires At 62, Mrs. Livermore Works To 65"
"Worst Case Plan- Harry Is Involuntarily Retired Right Now"
etc...
I have a few of them going, and I have been naming the files in this manner, but it would be pretty slick to have it on the title page instead of "Retirement Plan"...
Cheers
It does this; maybe you don't see it because "Retirement Plan" is so big. Under Retirement Plan, it shows the name of your plan... here's one of mine I just copied the title page:

2024
March 13
Retirement
Plan
Early 56 (<-- this is the name of my plan)
Link to Plan


I agree with you about not needing TPAW to estimate daily activity. Everytime I open TPAW, I just enter my current portfolio balance. I thought there was something special about having the funds in there for future look.
by Hyperchicken » Tue Feb 13, 2024 2:28 pm | | ... Dang. That rat and pellet thing is pretty depressing. | Guess I better get back to work.
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Harry Livermore
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Harry Livermore »

skipper wrote: Wed Mar 13, 2024 6:07 pm
Harry Livermore wrote: Wed Mar 13, 2024 5:42 pm OK, knowing your to-do list is long... here is another feature request:
How about the ability to name the plan on the title page of the PDF?
"Harry's Basic Plan"
"Harry Retires At 62, Mrs. Livermore Works To 65"
"Worst Case Plan- Harry Is Involuntarily Retired Right Now"
etc...
I have a few of them going, and I have been naming the files in this manner, but it would be pretty slick to have it on the title page instead of "Retirement Plan"...
Cheers
It does this; maybe you don't see it because "Retirement Plan" is so big. Under Retirement Plan, it shows the name of your plan... here's one of mine I just copied the title page:

2024
March 13
Retirement
Plan
Early 56 (<-- this is the name of my plan)
Link to Plan


I agree with you about not needing TPAW to estimate daily activity. Everytime I open TPAW, I just enter my current portfolio balance. I thought there was something special about having the funds in there for future look.
Where did you enter the name "Early 56"?
Cheers
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NearlyRetired
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by NearlyRetired »

Harry Livermore wrote: Wed Mar 13, 2024 6:33 pm
skipper wrote: Wed Mar 13, 2024 6:07 pm
Harry Livermore wrote: Wed Mar 13, 2024 5:42 pm OK, knowing your to-do list is long... here is another feature request:
How about the ability to name the plan on the title page of the PDF?
"Harry's Basic Plan"
"Harry Retires At 62, Mrs. Livermore Works To 65"
"Worst Case Plan- Harry Is Involuntarily Retired Right Now"
etc...
I have a few of them going, and I have been naming the files in this manner, but it would be pretty slick to have it on the title page instead of "Retirement Plan"...
Cheers
It does this; maybe you don't see it because "Retirement Plan" is so big. Under Retirement Plan, it shows the name of your plan... here's one of mine I just copied the title page:

2024
March 13
Retirement
Plan
Early 56 (<-- this is the name of my plan)
Link to Plan


I agree with you about not needing TPAW to estimate daily activity. Everytime I open TPAW, I just enter my current portfolio balance. I thought there was something special about having the funds in there for future look.
Where did you enter the name "Early 56"?
Cheers
Go to Main Plan/View All Plans
Select the plan to rename and choose the Actions dropdown
Then Edit Label
To err is to be human, to really mess up, use a computer
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skipper
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by skipper »

NearlyRetired wrote: Wed Mar 13, 2024 6:40 pm Go to Main Plan/View All Plans
Select the plan to rename and choose the Actions dropdown
Then Edit Label
This is right, but it sounded like Harry was naming his 'files' and wondering where the names went. Usually when you start a new plan, it starts with a Label box where you enter the name. This is what shows up under Retirement Plan. Let us know HL. :beer
by Hyperchicken » Tue Feb 13, 2024 2:28 pm | | ... Dang. That rat and pellet thing is pretty depressing. | Guess I better get back to work.
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Harry Livermore
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Harry Livermore »

NearlyRetired wrote: Wed Mar 13, 2024 6:40 pm
Harry Livermore wrote: Wed Mar 13, 2024 6:33 pm
skipper wrote: Wed Mar 13, 2024 6:07 pm
Harry Livermore wrote: Wed Mar 13, 2024 5:42 pm OK, knowing your to-do list is long... here is another feature request:
How about the ability to name the plan on the title page of the PDF?
"Harry's Basic Plan"
"Harry Retires At 62, Mrs. Livermore Works To 65"
"Worst Case Plan- Harry Is Involuntarily Retired Right Now"
etc...
I have a few of them going, and I have been naming the files in this manner, but it would be pretty slick to have it on the title page instead of "Retirement Plan"...
Cheers
It does this; maybe you don't see it because "Retirement Plan" is so big. Under Retirement Plan, it shows the name of your plan... here's one of mine I just copied the title page:

2024
March 13
Retirement
Plan
Early 56 (<-- this is the name of my plan)
Link to Plan


I agree with you about not needing TPAW to estimate daily activity. Everytime I open TPAW, I just enter my current portfolio balance. I thought there was something special about having the funds in there for future look.
Where did you enter the name "Early 56"?
Cheers
Go to Main Plan/View All Plans
Select the plan to rename and choose the Actions dropdown
Then Edit Label
Ah- I think it requires having an "account". I don't have "Go to Main Plan/View All Plans" as a menu item; I only have "Plan From Link"...
Cheers
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Harry Livermore
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Harry Livermore »

skipper wrote: Wed Mar 13, 2024 6:48 pm
Usually when you start a new plan, it starts with a Label box where you enter the name.
I have never seen that. But I have also not created an account at TPAWplanner... so that may be what's going on.
Cheers
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Ben Mathew
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Ben Mathew »

ConstantChrysalis wrote: Tue Mar 12, 2024 7:14 pm
Ben Mathew wrote: Tue Mar 12, 2024 7:00 pm The current portfolio balance is assumed to be VT and BND for the purpose of estimating an updated portfolio balance daily. We will expand the list of funds that can be used for this so you can more closely model your actual portfolio. Note that this does not impact the simulation beyond the estimate for the current portfolio balance.
I'd suggest removing this function rather than continuing to develop it. It is no problem to enter in the actual portfolio balance every month and doing so is more accurate unless someone actually has the funds in their portfolio and in the assumed balanced allocation mix, which I bet rarely if ever happens. It is confusing to have this value change automatically each day, especially for a new user. It makes plan link results non-reproducible. Also, the recommendation is to use a risk-free asset for the allocation, which is best approximated as duration-matched TIPS, and using/seeing BND conflicts/confuses that point.
Harry Livermore wrote: Wed Mar 13, 2024 8:59 am I second this sentiment. I revisit the planner often, using a saved link, and the first thing I do is update the portfolio balance. It's very easy.
Ben, I think if you want to offer some (or many) choices of investments to track, as an advanced feature, that's harmless enough. But I'm guessing it will never include all the individual investments I have, so I'll probably just type in the portfolio balance manually each visit anyway...
At the very least, I would not necessarily prioritize this feature.
Cheers
skipper wrote: Wed Mar 13, 2024 6:07 pm I agree with you about not needing TPAW to estimate daily activity. Everytime I open TPAW, I just enter my current portfolio balance.
Thanks for this feedback. I'm curious to learn how you update the portfolio balance. Do you use an account aggregator that keeps track of your balances across accounts? Or do you log in to different accounts and add up the balances yourself? I do the latter and I have several different accounts, so it's somewhat time consuming and not something I do most of the times that I visit the planner.

If everyone updated their portfolio balance every time they visit the planner, then the balance update would not be needed. But if they don't, then the problem with not updating the previous balance is that other numbers in the planner—specifically the date and expected returns—have changed. And typically the portfolio balance would have offset some of these changes. So not updating the portfolio balance can cause the spending projections to vary more. Specifically:

Future savings and withdrawal adjustments: For accumulators, as they move forward through time, future savings will decline (there's less time left till retirement). But those savings would have gone into the portfolio and so the portfolio balance goes up, leaving the spending projections unchanged (if portfolio returns were as expected). Allowing the future savings to decline (because age is updated) while keeping the portfolio balance constant (fixed at the last entry) would cause the spending projection to decline incorrectly. For retirees, it would be the reverse: not reducing the portfolio balance to reflect withdrawals would cause the spending projection to increase incorrectly.

Expected return changes: As the expected return rises, the portfolio balance falls, offsetting the impact on spending to some extent. If we change expected return without changing the portfolio balance, the impact on spending would be too high. An advantage of focusing on spending rather than the portfolio balance is that you can see the offsetting effect and be less worried about the decline in your portfolio balance during a market crash. So I think this is important to see even when you come to the planner casually without having your actual portfolio balance in hand. Think of it as a substitute for following, say, the S&P500 or some other index. The planner provides a stock and bond index in the context your spending projection. That's more informative than the raw index itself. Say you hear on the news that the S&P 500 had dropped 10% this week. Instead of panicking, you take a look at the planner and see that because of (a) your bond holdings, (b) your Social Security and pensions, and (c) the increased expected return of stocks, your projected spending has only dropped 3%. I think there's a lot of value in that.

While imperfect, an approximate adjustment of the portfolio balance that assumes VT for stocks and BND for bonds would lead to more stable and more accurate spending projections than no adjustment. A broader range of assets—including duration matched TIPS—as well as more options for specifying your actual asset allocation and savings/withdrawals will eventually make this estimate more accurate.

As for the issue of reproducibility of plan links, we will implement a non-dated plan which is not tied to a specific date and so does not move forward in time. So none of the parameters associated with the plan will change. This was based on feedback we got from use in a classroom setting, but this feature will help more generally for creating examples for discussion. So that should solve this problem.
Total Portfolio Allocation and Withdrawal (TPAW)
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Ben Mathew
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Ben Mathew »

Harry Livermore wrote: Wed Mar 13, 2024 6:53 pm Ah- I think it requires having an "account". I don't have "Go to Main Plan/View All Plans" as a menu item; I only have "Plan From Link"...
Cheers
Yes, plans from links don't have a name. I've added this to the to-do list.
Total Portfolio Allocation and Withdrawal (TPAW)
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Harry Livermore
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Harry Livermore »

Ben Mathew wrote: Thu Mar 14, 2024 1:23 am
Thanks for this feedback. I'm curious to learn how you update the portfolio balance. Do you use an account aggregator that keeps track of your balances across accounts? Or do you log in to different accounts and add up the balances yourself? I do the latter and I have several different accounts, so it's somewhat time consuming and not something I do most of the times that I visit the planner.
I have a spreadsheet that I manually update every Saturday morning. I enter the resulting portfolio balance I use the planner.
Cheers
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skipper
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by skipper »

Ben Mathew wrote: Thu Mar 14, 2024 1:23 am
skipper wrote: Wed Mar 13, 2024 6:07 pm I agree with you about not needing TPAW to estimate daily activity. Everytime I open TPAW, I just enter my current portfolio balance.
Thanks for this feedback. I'm curious to learn how you update the portfolio balance. Do you use an account aggregator that keeps track of your balances across accounts? Or do you log in to different accounts and add up the balances yourself? I do the latter and I have several different accounts, so it's somewhat time consuming and not something I do most of the times that I visit the planner.

If everyone updated their portfolio balance every time they visit the planner, then the balance update would not be needed.
I admit my situation is easy because my portfolio is 100% Fidelity and my 3-funders are close enough to TPAW's 2-fund that I don't need to worry about my specific AA. I just thought there was magic behind the curtain (or a Monte Carlo) that was estimating my portfolio through retirement. I use my own Excel spreadsheet to track balance, contributions, and earnings by account and @swimirvine's portfolio manager at rebalance time so I enter the balances manually. As an accumulator (or retiree), I would enter my updated balance manually into TPAW anyway. No estimate you could provide is going to be actual over time; I expect the variance to be greater as time passes, actual contributions (or expenditures) and returns change, etc. I'm fine with my manual balance entry as a course correction and TPAW's estimate of the future.

Regarding spending, I don't have anything entered in the expenditure section and I wouldn't put anything there anyway. I don't consider TPAW (or VPW) a budgeting tool or retirement planner; that's RPM and Pralana territory. TPAW (and VPW) say, "Here's how much you should save as an accumulator and here's how much you can withdraw as a retiree, based on my (the tool's) rules and your current portfolio balance." If I add a big windfall to the portfolio down the road, I'll have to make a manual course correction anyway and either tool is going to change my save/withdraw number according to its own rules; VPW based on WAG and TPAW based on TLM. In the end, it's still up to me as the accumulator or retiree to decide what to do based on all the information available, not just the output of one tool. My thinking anyway.

EDIT: If I'm going to rely on TPAW fully as an Allocation and Withdrawal method in retirement, then I want to see MY Total Portfolio mix in the View Balance History; not VT and BND.
Last edited by skipper on Thu Mar 14, 2024 7:57 am, edited 2 times in total.
by Hyperchicken » Tue Feb 13, 2024 2:28 pm | | ... Dang. That rat and pellet thing is pretty depressing. | Guess I better get back to work.
jocdoc
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by jocdoc »

Is there a way to fix the asset allocation, ie not change the risk tolerance with age or is this an antithesis for the raison d'etre (reason) of your planner?
Please ignore this question. I finally figured it out.
Last edited by jocdoc on Thu Mar 14, 2024 9:04 am, edited 1 time in total.
ConstantChrysalis
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by ConstantChrysalis »

Ben Mathew wrote: Thu Mar 14, 2024 1:23 am
Thanks for this feedback. I'm curious to learn how you update the portfolio balance. Do you use an account aggregator that keeps track of your balances across accounts? Or do you log in to different accounts and add up the balances yourself? I do the latter and I have several different accounts, so it's somewhat time consuming and not something I do most of the times that I visit the planner.
My workflow: We have most, but not all, of our assets at Fidelity and use their Full View tool, an aggregator. We are decumlulators.

Once a week, I download the Portfolio positions CSV from Fidelity. I have a Google Sheets master spreadsheet and replace the Portfolio sheet with the new CSV. I check to make sure I caught any taxable dividends, interest, or capital gains and T-Bill maturities and/or auto rollovers so I update our tax liability. This also automatically updates my Asset Allocation sheet, but I just glance at it.

Once a month, I do the same as above, except I take the Account Balance, which reflects those investments I consider my TPAW portfolio (i.e. not cash, not 529, not DAF) and update the Planner balance. I log both that balance and the recommended spending amount in another sheet that tracks our spending vs. LMP (our floor) and our spending vs. the TPAW recommendation (our ceiling). Note that monthly spending is very lumpy so this is feedback for judging the rest of the year's spending capacity. Note by looking at the trends in balance vs. spending I get the consumption smoothing benefit feedback we both agree is important.

Once a quarter, I do the same as above, except I replenish our cash reserve from the portfolio. I also take the Planner asset allocation recommendation and put that in my Asset Allocation spreadsheet, which adjusts the recommendation for the TIPS ladder that is part of our LMP and outputs a rebalancing plan for the portfolio,. I supply several other inputs, like TIPS fund durations for the non-LMP TIPS funds. I then execute the rebalancing, which sweeps up any cash from the TIPS ladder and any other income I chose not to automatically reinvest.

Once a year, I do a Roth conversion and tax projection for the next year. I update Social Security actual/projected amounts and update the LMP withdrawal amount going forward based on our personal inflation from the previous year.

I understand your noble goal of making sure that the Planner is both easy to use and accurate (and especially not misleading in a way that results in harm), but if you reflect on all of the above, inputing the current balance is not only trivially simple but is the only way it will be accurate. Are you really going to model a whole TIPS ladder with CPI updates and interest and maturities, dividend and capital gains distribution reinvestments or not in funds, cash balances, external portfolio income and withdrawal, RMDs, etc.? Also, by estimating the balance, the Planner is assuming that our current portfolio asset allocation is the same as its recommendation, and ours drifts between quarterly rebalancing, and I might choose to use the Planner's recommendation as a direction for nudging and not an exact and immediate action.

The Planner does an amazing job of wrapping up an incredibly powerful LCM tool with a very easy to use UI with awesome responsively-designed output. I think there are things, like first-class LMP handling, that will make it even more useful. There are also things that suck up development time and resource and result in feature creep with little to no user benefit, and I firmly believe (despite the great original intent) that this is one of them.

Pardon the preachy tone for a minute: It's important, in any software development, to identify your user. Right now, that user is pretty financially sophisticated (i.e., they are mostly Bogleheads, they know/learned enough about the LCM to both find the Planner and take the plunge to actually use it, etc.). This kind of user is going to have their actual account balance handy AND will want to use the actual balance rather than rely on a sub-optimal projection. It's also important to decide what to NOT build. Function that isn't used adds to the development time/cost, can increase complexity for the user (plus they have to learn/know about it even if they don't use it), and it provides an additional surface for both bugs and misunderstandings/misuse and increases support cost. I know you are both very skilled and accomplished developers, so consider this all just a friendly reminder.

Keep up the amazing work on this valuable tool!
Last edited by ConstantChrysalis on Thu Mar 14, 2024 8:38 am, edited 1 time in total.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by skipper »

ConstantChrysalis wrote: Thu Mar 14, 2024 7:49 am ...inputing the current balance is not only trivially simple but is the only way it will be accurate.

The Planner does an amazing job of wrapping up an incredibly powerful LCM tool with a very easy to use UI with awesome responsively-designed output.

...identify your user. Right now, that user is pretty financially sophisticated (i.e., they are mostly Bogleheads, they know/learned enough about the LCM to both find the Planner and take the plunge to actually use it, etc.). This kind of user is going to have their actual account balance handy AND will want to use the actual balance rather than rely on a sub-optimal projection.

Keep up the amazing work on this valuable tool!
Your entire post, including your workflow example, is spot-on. Well said! :beer
by Hyperchicken » Tue Feb 13, 2024 2:28 pm | | ... Dang. That rat and pellet thing is pretty depressing. | Guess I better get back to work.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by TimeRunner »

ConstantChrysalis wrote: Thu Mar 14, 2024 7:49 am....This kind of user is going to have their actual account balance handy AND will want to use the actual balance rather than rely on a sub-optimal projection.
Bingo!

I have a workbook of Google sheets that auto-updates our portfolio assets and flows to sheets that estimate yearly income and taxes, and track monthly account balances over time. No need to develop anything more complicated, just as it's not necessary to optimize SS filing dates within TPAW, for example.

Thank you for continuing to develop TPAW.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by skipper »

Ben Mathew wrote: Tue Mar 12, 2024 7:00 pm Income and extra expense flows are necessary inputs in the lifecycle model. Asset allocation and withdrawals would be a function of these flows. So being able to model these flows better would be useful.

The current portfolio balance is assumed to be VT (for stocks) and BND (for bonds) for the purpose of estimating an updated portfolio balance daily. We will expand the list of funds that can be used for this so you can more closely model your actual portfolio. Note that this does not impact the simulation beyond the estimate for the current portfolio balance.
I don't understand why extra expense would be a necessary input. I don't have any expenses entered into TPAW and I get what appears to be reasonable savings/AA numbers as an accumulator and withdrawal/AA numbers as a retiree. You don't need expenses in TPAW to know how much you can withdraw to cover gross expenses (including taxes) and deplete the portfolio at end of life.

This is why TPAW doesn't need to estimate the current portfolio balance. Of course, for the "A" portion of TPAW to work, you have to have something in there, otherwise, the model doesn't work at all I suppose. Unless I'm able to have my exact portfolio (or at least the bulk of it) in TPAW, there isn't much use in using the updated AA numbers except as a guide. I guess using two very well rounded funds for stock and bond makes sense, then users can just say to themselves, "TPAW recommends X fixed income and Y equity," then the user checks their actual fixed and equity positions against what TPAW suggests.
by Hyperchicken » Tue Feb 13, 2024 2:28 pm | | ... Dang. That rat and pellet thing is pretty depressing. | Guess I better get back to work.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Ben Mathew »

Thanks for describing your processes for obtaining your portfolio balance and for sharing your thoughts on the usefulness of the estimated portfolio balance feature. I will keep these perspectives in mind. We weren't planning on adding new functionalities to the balance estimation until at least duration matching is done, so we'll continue to think about this.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

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skipper wrote: Thu Mar 14, 2024 9:08 am I don't understand why extra expense would be a necessary input. I don't have any expenses entered into TPAW and I get what appears to be reasonable savings/AA numbers as an accumulator and withdrawal/AA numbers as a retiree. You don't need expenses in TPAW to know how much you can withdraw to cover gross expenses (including taxes) and deplete the portfolio at end of life.
Let's take an example. To keep things simple, let's assume portfolio growth rate = 0% and spending tilt = 0%.

Suppose you have a portfolio balance of $1000 and 4 months (Jan, Feb, Mar, Apr) remaining. Each month you can withdraw $1000/4 = $250 each. So your withdrawals will be:

Jan: $250
Feb: $250
Mar: $250
Apr: $250

But now suppose that in Feb, you have an extra expense (say a college tuition bill) of $400. So now you have only $1,000 - $400 = $600 remaining for general expenses. This works out to $600/4 = $150 per month of general expenses. Now your withdrawals will be:

Jan: $150
Feb: $150 + $400 (college tuition) = $550
Mar: $150
Apr: $150

So if there happens to be an extra expense—i.e. one month has an extra spending requirement that other months don't—then the planner would need to know that in order to calculate withdrawals.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

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jocdoc wrote: Thu Mar 14, 2024 7:44 am Is there a way to fix the asset allocation, ie not change the risk tolerance with age or is this an antithesis for the raison d'etre (reason) of your planner?
Please ignore this question. I finally figured it out.
Curious to know what you were looking for (and found):

Were you looking to fix the risk tolerance (which can be done in "Risk -> Advanced -> Decrease Risk Tolerance With Age")?

Or were you looking to fix the asset allocation (for which you would need to select the SPAW strategy and then specify a fixed asset allocation)?
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by skipper »

Ben Mathew wrote: Fri Mar 15, 2024 12:13 am
skipper wrote: Thu Mar 14, 2024 9:08 am I don't understand why extra expense would be a necessary input. I don't have any expenses entered into TPAW and I get what appears to be reasonable savings/AA numbers as an accumulator and withdrawal/AA numbers as a retiree. You don't need expenses in TPAW to know how much you can withdraw to cover gross expenses (including taxes) and deplete the portfolio at end of life.
Let's take an example. To keep things simple, let's assume portfolio growth rate = 0% and spending tilt = 0%.

Suppose you have a portfolio balance of $1000 and 4 months (Jan, Feb, Mar, Apr) remaining. Each month you can withdraw $1000/4 = $250 each. So your withdrawals will be:

Jan: $250
Feb: $250
Mar: $250
Apr: $250

But now suppose that in Feb, you have an extra expense (say a college tuition bill) of $400. So now you have only $1,000 - $400 = $600 remaining for general expenses. This works out to $600/4 = $150 per month of general expenses. Now your withdrawals will be:

Jan: $150
Feb: $150 + $400 (college tuition) = $550
Mar: $150
Apr: $150

So if there happens to be an extra expense—i.e. one month has an extra spending requirement that other months don't—then the planner would need to know that in order to calculate withdrawals.
I'm glad that there's the option to add extra expense, but it's not necessary for the model to work, and it's especially not necessary for the accumulator (me). "Extra expense" implies that there's "expense", but that's not present in TPAW; there are no expenses BUT extra expenses.

But let's talk about retirees only for a moment (give me a little rope here, as I'm not a retiree). Many/most times, one cannot or does not predict the extra expense. One might say, "I'm going to buy a car in five years," or, "I'm taking a trip next June." Okay, fine; put that in and let the model adjust today the current monthly WD while maintaining the final portfolio value of zero. But let's say I don't enter an extra expense; I just go out and buy the car then enter the resulting portfolio balance. TPAW makes the same necessary adjustment, it just does it at the time of the transaction and I have to adjust accordingly. Or, I enter the five year car purchase, but the car dies next month- what do I do? I delete the extra expense and change my portfolio balance manually.

I'm saying two three things: (1) extra expense is not a necessary input; (2) the value of adding a multitude of specific expense categories to TPAW is low and could be negative; (3) manual portfolio balance entry is the most elegant, logical, and accurate solution for TPAW.
by Hyperchicken » Tue Feb 13, 2024 2:28 pm | | ... Dang. That rat and pellet thing is pretty depressing. | Guess I better get back to work.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by jocdoc »

The extra extra expense for a retiree might be a down payment for a purchasing second home near the kids while the mortgage payments might go under regular expenses. I would keep at least one extra expense line in the model. Not sure how many extra expense lines are necessary. Probably less than three. Then again you could model the above situation by subtracting the down payment from your starting porfolio while including the mortgage payments in the monthly expenses.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Moniker »

Ben Mathew wrote:
Thank you for the tool, Ben. Would it be possible to add the underlying amortization schedule as a screen or report? It appears that the PDF report has many of the components required. But seeing one schedule (or schedules for 5th/50th/95th percentiles) would help me visualize the results better.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

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Moniker wrote: Tue Mar 19, 2024 10:48 am Thank you for the tool, Ben. Would it be possible to add the underlying amortization schedule as a screen or report? It appears that the PDF report has many of the components required. But seeing one schedule (or schedules for 5th/50th/95th percentiles) would help me visualize the results better.
Can you elaborate? The PDF report has separate tables with spending, portfolio balance, and withdrawal rates. Are you looking for these to be combined into a single table for selected percentiles?
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Moniker »

Ben Mathew wrote: Tue Mar 19, 2024 1:07 pm
Moniker wrote: Tue Mar 19, 2024 10:48 am Thank you for the tool, Ben. Would it be possible to add the underlying amortization schedule as a screen or report? It appears that the PDF report has many of the components required. But seeing one schedule (or schedules for 5th/50th/95th percentiles) would help me visualize the results better.
Can you elaborate? The PDF report has separate tables with spending, portfolio balance, and withdrawal rates. Are you looking for these to be combined into a single table for selected percentiles?
Yes, that's correct. That would eliminate the need to combine tables on the user's part. Similar to your ABW spreadsheet:

Image

Although, including separate columns for 'future savings,' 'income during retirement,' and simulated market returns would be nice for a TPAW version.

Here is an attempt although my savings and contributions, entered as real figures, are not matching the tool's totals. I am probably missing something there. (Click the thumbnail.)
Image

Link with arbitrary details used to generate the above:
https://tpawplanner.com/link?params=cBd ... 6wMkzaQRJK
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Ben Mathew »

Moniker wrote: Tue Mar 19, 2024 5:38 pm
Ben Mathew wrote: Tue Mar 19, 2024 1:07 pm
Moniker wrote: Tue Mar 19, 2024 10:48 am Thank you for the tool, Ben. Would it be possible to add the underlying amortization schedule as a screen or report? It appears that the PDF report has many of the components required. But seeing one schedule (or schedules for 5th/50th/95th percentiles) would help me visualize the results better.
Can you elaborate? The PDF report has separate tables with spending, portfolio balance, and withdrawal rates. Are you looking for these to be combined into a single table for selected percentiles?
Yes, that's correct. That would eliminate the need to combine tables on the user's part. Similar to your ABW spreadsheet:

Image

Although, including separate columns for 'future savings,' 'income during retirement,' and simulated market returns would be nice for a TPAW version.
Got it. An amortization table like this can be created only for a specific sequence. It doesn't work with percentile summaries because that's summarizing the variables (portfolio balance, spending, etc.) across different sequences. But we are planning on adding the option to simulate the expected sequence (where the realized return equals the expected return in each period). That will correspond to the amortization shown in the table above. When that is implemented, we'll try to display the amortization in a single table like that.

Thanks for the suggestion. I've added it to the list.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by fi_no_retire »

New to TPAW tool so asking basic question as not obvious to me where to change this..

in section "Current Portfolio Balance", I put in my $, but when I click on the View Balance History link, it states:

This estimate assumes you are invested in:
Stocks — Vanguard Total World Stock ETF (VT)
Bonds — Vanguard Total Bond Market ETF (BND)

and

Ended With
$xx with 26% in stocks.


How do I change what I'm invested in and the allocation?
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by dorster »

fi_no_retire wrote: Wed Mar 20, 2024 4:10 pm New to TPAW tool so asking basic question as not obvious to me where to change this..

How do I change what I'm invested in and the allocation?
As of now the tool tells you what your stock/bond allocation should be based on your "total portfolio" and risk aversion (which you enter). The total portfolio can include currently held assets and future cash flows (from work, pensions, SS, inheritances, rental income, or investment property sales).

TPAW doesn't have an option to choose stocks other than VT or bonds other than BND at this time.

I think of TPAW as being useful for showing you the ranges of consumption (spending) your portfolio and future income assumptions can support. Its a different type of planner than portfolio visualizer's Monte Carlo or Financial Goals calculators.

I use it by setting up assumed, optimistic, and pessimistic scenarios (about how long I'll work for example) and then see what types of spending I'd be able to support at the median outcome and worst-case scenarios (like 5th percentile returns).

Ben, how'd I do?
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Ben Mathew »

fi_no_retire wrote: Wed Mar 20, 2024 4:10 pm New to TPAW tool so asking basic question as not obvious to me where to change this..

in section "Current Portfolio Balance", I put in my $, but when I click on the View Balance History link, it states:

This estimate assumes you are invested in:
Stocks — Vanguard Total World Stock ETF (VT)
Bonds — Vanguard Total Bond Market ETF (BND)

and

Ended With
$xx with 26% in stocks.


How do I change what I'm invested in and the allocation?
dorster wrote: Wed Mar 20, 2024 5:17 pm As of now the tool tells you what your stock/bond allocation should be based on your "total portfolio" and risk aversion (which you enter). The total portfolio can include currently held assets and future cash flows (from work, pensions, SS, inheritances, rental income, or investment property sales).

TPAW doesn't have an option to choose stocks other than VT or bonds other than BND at this time.

I think of TPAW as being useful for showing you the ranges of consumption (spending) your portfolio and future income assumptions can support. Its a different type of planner than portfolio visualizer's Monte Carlo or Financial Goals calculators.

I use it by setting up assumed, optimistic, and pessimistic scenarios (about how long I'll work for example) and then see what types of spending I'd be able to support at the median outcome and worst-case scenarios (like 5th percentile returns).

Ben, how'd I do?
Dorster: What you said is correct.

fi_no_retire: As Dorster said, currently there's no way to model your portfolio beyond just VT for stocks and BND for bonds. The 26% is coming from the asset allocation recommended by the plan. There's no way to change that either make that different from the recommended asset allocation. (Edited to clarify: As jocdoc notes below, the recommended asset allocation of the plan itself can be adjusted in the Risk section.)

Note that this assumption is used only for auto-updating your portfolio balance. It's irrelevant if you manually update your portfolio balance each time you use the planner. The simulation itself is based on Shiller's data for stocks and bonds from 1871 onwards, and is not related to this assumption. See this post for more about this feature.

Eventually we'll expand the options here beyond VT/BND and also allow specifying a portfolio asset allocation that is different from the recommended target asset allocation. There will probably also be an option to opt out of portfolio balance updates for those who will be entering the portfolio balance manually each time they use the planner.
Last edited by Ben Mathew on Thu Mar 21, 2024 10:26 am, edited 1 time in total.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by jocdoc »

fl_no_retire: regarding asset allocation.

You may already know this but you can change your ratio of stock bonds by playing with the risk section. (at least in decumulation) If you increase your risk then the starting and ending allocation to stocks is higher.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Roger2 »

Thanks so much for this tool! I found it really insightful and appreciate being able to alter different variables and see the resultant effects. Looking forward to being able to see the results with other assets as well once that’s available.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

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Roger2 wrote: Tue Apr 02, 2024 8:42 pm Thanks so much for this tool! I found it really insightful and appreciate being able to alter different variables and see the resultant effects. Looking forward to being able to see the results with other assets as well once that’s available.
Glad to hear you're finding the tool useful!
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Catalina25 »

I’m new to TPAW, and have only been using it to model various scenarios, rather extensively, for the last week or so. Very impressed ... kudos!

My original withdrawal plan was based on the 4% rule (actually, 3%) which I had been modeling out for a very long time, but the TPAW tool has me very intrigued. I’ve read the documentation within the tool and the rather lengthy forum topic, but I am not seeing a basic “How To” to use during the withdrawal period.

Specifically, say I’m embarking on my first withdrawal next month on May 1st. I would enter my current portfolio balance on that date, run the planner, then withdraw the amount returned (50th percentile) and rebalance as indicated. Then, on June 1st, I would re-enter my new current portfolio balance on that date, then withdraw and rebalance accordingly. July 1st, same thing and wash, rinse, repeat on the 1st of every month.

Is that correct?

Thanks.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Ben Mathew »

Catalina25 wrote: Wed Apr 03, 2024 6:42 am I’m new to TPAW, and have only been using it to model various scenarios, rather extensively, for the last week or so. Very impressed ... kudos!
Thanks. Glad you're liking the tool!
Catalina25 wrote: Wed Apr 03, 2024 6:42 am My original withdrawal plan was based on the 4% rule (actually, 3%) which I had been modeling out for a very long time, but the TPAW tool has me very intrigued. I’ve read the documentation within the tool and the rather lengthy forum topic, but I am not seeing a basic “How To” to use during the withdrawal period.

Specifically, say I’m embarking on my first withdrawal next month on May 1st. I would enter my current portfolio balance on that date, run the planner, then withdraw the amount returned (50th percentile) and rebalance as indicated. Then, on June 1st, I would re-enter my new current portfolio balance on that date, then withdraw and rebalance accordingly. July 1st, same thing and wash, rinse, repeat on the 1st of every month.

Is that correct?

Thanks.
Yes, that's basically correct. Two things to note:

1. The current withdrawal amount displayed in Tasks will always be a fixed number, not a distribution. The uncertainty in spending and other variables for future months will resolve when you get to that month. So "Tasks for This Month" will say something like "Withdraw $5,000 from your portfolio." You won't have to pick a percentile.

2. You have to use some judgment about rebalancing to the target asset allocation to avoid excessive costs. The costs incurred by rebalancing include trading costs (fees, bid ask spreads), taxes in taxable accounts, and momentum at short horizons. You should probably use tolerance bands wide enough that you can often get by with withdrawing from the overweight assets and don't have to trade more than a few times a year. Support for rebalance decisions with tolerance bands is on the to-do list.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Catalina25 »

Ben Mathew wrote: Wed Apr 03, 2024 11:39 am
Catalina25 wrote: Wed Apr 03, 2024 6:42 am I’m new to TPAW, and have only been using it to model various scenarios, rather extensively, for the last week or so. Very impressed ... kudos!
Thanks. Glad you're liking the tool!

Catalina25 wrote: Wed Apr 03, 2024 6:42 am My original withdrawal plan was based on the 4% rule (actually, 3%) which I had been modeling out for a very long time, but the TPAW tool has me very intrigued. I’ve read the documentation within the tool and the rather lengthy forum topic, but I am not seeing a basic “How To” to use during the withdrawal period.

Specifically, say I’m embarking on my first withdrawal next month on May 1st. I would enter my current portfolio balance on that date, run the planner, then withdraw the amount returned (50th percentile) and rebalance as indicated. Then, on June 1st, I would re-enter my new current portfolio balance on that date, then withdraw and rebalance accordingly. July 1st, same thing and wash, rinse, repeat on the 1st of every month.

Is that correct?

Thanks.
Yes, that's basically correct. Two things to note:

1. The current withdrawal amount displayed in Tasks will always be a fixed number, not a distribution. The uncertainty in spending and other variables for future months will resolve when you get to that month. So "Tasks for This Month" will say something like "Withdraw $5,000 from your portfolio." You won't have to pick a percentile.
Good to know I was on the right track and, yes, understood on the "Tasks for This Month" information. Actually, I'm not sure why I included, "(50th percentile)", in my post. Sorry for the confusion.
2. You have to use some judgment about rebalancing to the target asset allocation to avoid excessive costs. The costs incurred by rebalancing include trading costs (fees, bid ask spreads), taxes in taxable accounts, and momentum at short horizons. You should probably use tolerance bands wide enough that you can often get by with withdrawing from the overweight assets and don't have to trade more than a few times a year. Support for rebalance decisions with tolerance bands is on the to-do list.
Yes, indeed. Just keep it in the ballpark within reason.

Again, thanks. Your efforts with both the TPAW tool and answering questions are very much appreciated!
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by Ben Mathew »

DATA UPDATED

CAPE earnings and historical return data have been updated with the latest data from Professor Shiller's website.
  • CAPE earnings now span the 10 years from January 2014 to December 2023.
  • Historical stock and bond returns now cover January 1871 to December 2023.
Regressions of expected return on CAPE are automatically run on the latest data. So the regression coefficients used to arrive at expected return estimates will change slightly with data updates.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by trickshot »

Hi Ben,

I think everyone agrees that as time passes, the portfolio balance should be updated, either manually or automatically to reflect the current balance. But real expenses and income should be updated too to match realized inflation, right? I think this is where automatic adjustment would be really useful. Are there any plans to implement this?
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by dorster »

trickshot wrote: Fri Apr 05, 2024 7:20 am Hi Ben,

I think everyone agrees that as time passes, the portfolio balance should be updated, either manually or automatically to reflect the current balance. But real expenses and income should be updated too to match realized inflation, right? I think this is where automatic adjustment would be really useful. Are there any plans to implement this?
I have my future income income streams set to either nominal or real depending on their nature. It looks like you can do the same for expenses.

Do you mean that if in Jan 2024 I have planned $24K of annual social security income starting in my 60s, it should update to $24,149 in Feb 2024?

I'd find this confusing personally, maybe I'd get used to it. I guess there could be an option for if the income (or expense) was real or nominal and if we wanted it to auto-adjust with CPI.
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Re: Total Portfolio Allocation and Withdrawal (TPAW)

Post by trickshot »

dorster wrote: Fri Apr 05, 2024 7:44 am Do you mean that if in Jan 2024 I have planned $24K of annual social security income starting in my 60s, it should update to $24,149 in Feb 2024?
Yes if that's the realized rate of inflation in Jan 2024, I believe $24,149 in Feb 2024 is a more accurate valuation of future SS income. Although I think annual updates would likely be sufficient since SS is adjusted annually. My point is that there should be adjustment for real income/expenses over time, which is something that I haven't really thought about much in the past.
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