Considering MaxiFi and New Retirement calculators...
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Considering MaxiFi and New Retirement calculators...
All:
Anybody have much experience with either of these two advanced calculators? I am retired now, wife working, and want an advanced program to help optimize our withdrawals from various accounts, consider conversions, etc. I recently have used the Flexible Retirement Planner, but it seems to have changed, and does not offer optimization from withdrawals from differing account types, so just not as useful (seems like it did in past versions). Help!
looking forward to any responses!
Joe
Anybody have much experience with either of these two advanced calculators? I am retired now, wife working, and want an advanced program to help optimize our withdrawals from various accounts, consider conversions, etc. I recently have used the Flexible Retirement Planner, but it seems to have changed, and does not offer optimization from withdrawals from differing account types, so just not as useful (seems like it did in past versions). Help!
looking forward to any responses!
Joe
Re: Considering MaxiFi and New Retirement calculators...
I think New Retirement has a free trial, but haven't made use of it. They had a Black Friday special too, but it's expired. Maybe they're betting that after 14 days of sleepless nights inputting data, you'll be too exhausted to cancel.BigJoeAllen wrote: Tue Dec 12, 2023 12:37 pm All:
Anybody have much experience with either of these two advanced calculators? I am retired now, wife working, and want an advanced program to help optimize our withdrawals from various accounts, consider conversions, etc. I recently have used the Flexible Retirement Planner, but it seems to have changed, and does not offer optimization from withdrawals from differing account types, so just not as useful (seems like it did in past versions). Help!
looking forward to any responses!
Joe
Re: Considering MaxiFi and New Retirement calculators...
See these conversations:BigJoeAllen wrote: Tue Dec 12, 2023 12:37 pm All:
Anybody have much experience with either of these two advanced calculators? I am retired now, wife working, and want an advanced program to help optimize our withdrawals from various accounts, consider conversions, etc. I recently have used the Flexible Retirement Planner, but it seems to have changed, and does not offer optimization from withdrawals from differing account types, so just not as useful (seems like it did in past versions). Help!
looking forward to any responses!
Joe
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viewtopic.php?t=407895
Re: Considering MaxiFi and New Retirement calculators...
Another one is Pralana, which is currently a spreadsheet with a free and paid version although they've been working on moving it to a website for some time. If someone is comfortable with complex spreadsheets its worth considering.
You have to try them to see if they work for you. The cost is nominal when compared to a hiring a person. If you want perfection there probably is no alternative to building your own spreadsheet but each person has to figure out where their level of "good enough" is. Some people will relish spending hundreds of hours on their perfect spreadsheet while others don't view spreadsheet building as a hobby and can accept some compromises.
To me, this is a case where a complex product should be supported and current so I don't mind and actually want to pay for a service that has value to me. Entrepreneurs with vision, expertise, and skills should be compensated if they add value. I realize some people see that differently and always want something free.
You have to try them to see if they work for you. The cost is nominal when compared to a hiring a person. If you want perfection there probably is no alternative to building your own spreadsheet but each person has to figure out where their level of "good enough" is. Some people will relish spending hundreds of hours on their perfect spreadsheet while others don't view spreadsheet building as a hobby and can accept some compromises.
To me, this is a case where a complex product should be supported and current so I don't mind and actually want to pay for a service that has value to me. Entrepreneurs with vision, expertise, and skills should be compensated if they add value. I realize some people see that differently and always want something free.
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Re: Considering MaxiFi and New Retirement calculators...
Yes thanks, I searched and of course found a real long thread on this...gatorking wrote: Tue Dec 12, 2023 1:23 pmSee these conversations:BigJoeAllen wrote: Tue Dec 12, 2023 12:37 pm All:
Anybody have much experience with either of these two advanced calculators? I am retired now, wife working, and want an advanced program to help optimize our withdrawals from various accounts, consider conversions, etc. I recently have used the Flexible Retirement Planner, but it seems to have changed, and does not offer optimization from withdrawals from differing account types, so just not as useful (seems like it did in past versions). Help!
looking forward to any responses!
Joe
viewtopic.php?t=411655
viewtopic.php?t=407895
Re: Considering MaxiFi and New Retirement calculators...
I've used MaxiFi for the past two years and it is different from your normal calculators. It doesn't ask you what your budget is. It asks for your assets, SS income, and your fixed expenses (housing mainly). Then it tells you how much "discretionary" income you would have left over to live on until age X and tries to make it so that it will be smooth. What I like about it is that you enter all your assets and SS once, and then you can clone multiple plans and play what ifs. They also have regular live webinars where you can ask questions and they answer them on the spot, so look for those and ask questions. Their assumptions are very conservative, but everything can be tweaked.
I signed up for Projection Lab this past summer and that is probably my favorite calculator although I did make the assumptions more conservative. They have a Discord channel for tech support and user support.
I signed up for Projection Lab this past summer and that is probably my favorite calculator although I did make the assumptions more conservative. They have a Discord channel for tech support and user support.
Re: Considering MaxiFi and New Retirement calculators...
I use MaxiFi now and used it's Windows predecessor ESPlanner for probably 20 years. Get the MonteCarlo version.
At least for me, the modeling was enough to be confident in my spending plan.
At least for me, the modeling was enough to be confident in my spending plan.
Re: Considering MaxiFi and New Retirement calculators...
I'm currently coming up to speed on Pralana, mainly for Roth conversion explorations. I have my own spreadsheet for my baseline plan. The issue with many of these commercial products is that they all come with certain built-in assumptions either to simplify some of the calculations or to cover the largest possible number of users of their products. If those assumptions don't conform with your assumptions, there are often workarounds. In many cases, you won't know until you're pretty far in whether that will work for you.. Still, the cost for many of these is pretty reasonable, though the time needed to get to the point where you know it's useful or not for your situation might indeed be expensive.stan1 wrote: Tue Dec 12, 2023 1:35 pm Another one is Pralana, which is currently a spreadsheet with a free and paid version although they've been working on moving it to a website for some time. If someone is comfortable with complex spreadsheets its worth considering.
You have to try them to see if they work for you. The cost is nominal when compared to a hiring a person. If you want perfection there probably is no alternative to building your own spreadsheet but each person has to figure out where their level of "good enough" is. Some people will relish spending hundreds of hours on their perfect spreadsheet while others don't view spreadsheet building as a hobby and can accept some compromises.
To me, this is a case where a complex product should be supported and current so I don't mind and actually want to pay for a service that has value to me. Entrepreneurs with vision, expertise, and skills should be compensated if they add value. I realize some people see that differently and always want something free.
Cheers.
Refusing or failing to fully understand an idea does not invalidate the idea itself, but it does undermine the opinions of those who are unwilling or unable to grasp it.
Re: Considering MaxiFi and New Retirement calculators...
How does having the Monte Carlo version help your planning? I've had ESPlanner and MaxiFi for over 10 years and, personally, never found the Monte Carlo analysis to be all that useful so I just renewed at the standard level for the first time. The premium version also gives you survivor reports and they have been very useful, but at this point I don't feel the need to run them. I strongly recommend that others use them until they are certain that they have that issue fully covered in all scenarios and at all ages/stages of retirement.twh wrote: Wed Dec 13, 2023 1:20 am I use MaxiFi now and used it's Windows predecessor ESPlanner for probably 20 years. Get the MonteCarlo version.
At least for me, the modeling was enough to be confident in my spending plan.
I am interested in how you use the Monte Carlo feature because I am wondering if I've missed something all these years. My feeling has been that the default assumptions are conservative enough that there is almost no chance that my plan will fail, thus there is no reason to bother with the Monte Carlo results. Of course that is probably because we have reached a point where we don't need to assume/project market returns to support our current lifestyle and that is all we want.
I assume our actual returns will be better than the conservative default assumptions in MaxiFi, but I just re-run it each year to reflect our current expenses and balances and go from there. The projected discretionary spending level influences our actual spending to some degree, but not very much. For me, I continue to use it mainly for the peace of mind I get from our general trend and to run alternate scenarios when making financial decisions.
Another poster mentioned that MaxiFi "tries" to smooth discretionary spending. I would say that it tries to automatically make it smooth, but it will make it smooth with a little help from the end user. I think it will usually be able to make it smooth as long as you take steps (e.g. enter special withdrawals) to avoid cash constraints. In our case, we need to include special withdrawals to support a higher level of spending prior to starting SS. I suspect that is a fairly common scenario. For the best results, special expense entries probably should be used to factor in things like projected health insurance and healthcare expenses. Obviously, the special bequest entry can also have a huge effect on discretionary spending.
MaxiFi doesn't have any special features for Roth conversions, but they can be modeled. I may end up doing some conversions just because I can, but MaxiFi says they will have a surprisingly small impact on our real lifetime income so I'm 100% willing to forego them if we have other things we want to do with those funds in those years. I've been told the same by a planner, but perhaps that isn't true for folks in the highest tax brackets.
Re: Considering MaxiFi and New Retirement calculators...
Basically Monte Carlo runs many many simulations of what could happen and not just what is predicated based on historical data. If you are comfortable with the risk at a certain spending level after the Monte Carlo, the chance of being good in the long term are good because of how many simulations were run. Now, you have to define your own "comfortable with the risk". The higher you asset level and the lower your spending/obligations the lower confidence you should be able to tolerate. For me, I'm fine at 80%. MaxiFi also has its report of using TIPS which is the worst possible case -- and shocking low spending 
This is a good explanation:
https://www.investopedia.com/articles/i ... basics.asp

This is a good explanation:
https://www.investopedia.com/articles/i ... basics.asp
Re: Considering MaxiFi and New Retirement calculators...
After being a paid user of ESPlanner and MaxiFi for 10+ years, I switched over to Pralana Gold over 2 years ago. I find PG an order of magnitude more capable than any other retirement calculator I've come across. For my money, it's worth every penny.
I've done the free trials of many of the newer fintech calculators such as New Retirement, OnTrajectory, etc; and found them all rather simplistic and not as robust as PG.
I've done the free trials of many of the newer fintech calculators such as New Retirement, OnTrajectory, etc; and found them all rather simplistic and not as robust as PG.
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Re: Considering MaxiFi and New Retirement calculators...
Do you know if Microsoft Excel itself is essential for optimum use of Pralana or whether other spreadsheet software (Google Sheets, Librecalc, etc) are satisfactory? If Excel is recommended, what version(s) would be ok?nanosour wrote: Wed Dec 13, 2023 11:59 am After being a paid user of ESPlanner and MaxiFi for 10+ years, I switched over to Pralana Gold over 2 years ago. I find PG an order of magnitude more capable than any other retirement calculator I've come across. For my money, it's worth every penny.
I've done the free trials of many of the newer fintech calculators such as New Retirement, OnTrajectory, etc; and found them all rather simplistic and not as robust as PG.
Re: Considering MaxiFi and New Retirement calculators...
Nonosour has me seriously considering Pralana so I was just looking into it and right now you need Excel 2007 or later; however, sometime in January they intend to switch to a fully web-based application for 2024 and beyond.marc in merrimack wrote: Wed Dec 13, 2023 12:34 pmDo you know if Microsoft Excel itself is essential for optimum use of Pralana or whether other spreadsheet software (Google Sheets, Librecalc, etc) are satisfactory? If Excel is recommended, what version(s) would be ok?nanosour wrote: Wed Dec 13, 2023 11:59 am After being a paid user of ESPlanner and MaxiFi for 10+ years, I switched over to Pralana Gold over 2 years ago. I find PG an order of magnitude more capable than any other retirement calculator I've come across. For my money, it's worth every penny.
I've done the free trials of many of the newer fintech calculators such as New Retirement, OnTrajectory, etc; and found them all rather simplistic and not as robust as PG.
Update 2024-01-18: Pralana site now says the web version will be available in March.
Last edited by rustwood on Thu Jan 18, 2024 7:05 am, edited 1 time in total.
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Re: Considering MaxiFi and New Retirement calculators...
Thanks for this.rustwood wrote: Wed Dec 13, 2023 3:05 pmNonosour has me seriously considering Pralana so I was just looking into it and right now you need Excel 2007 or later; however, sometime in January they intend to switch to a fully web-based application for 2024 and beyond.marc in merrimack wrote: Wed Dec 13, 2023 12:34 pmDo you know if Microsoft Excel itself is essential for optimum use of Pralana or whether other spreadsheet software (Google Sheets, Librecalc, etc) are satisfactory? If Excel is recommended, what version(s) would be ok?nanosour wrote: Wed Dec 13, 2023 11:59 am After being a paid user of ESPlanner and MaxiFi for 10+ years, I switched over to Pralana Gold over 2 years ago. I find PG an order of magnitude more capable than any other retirement calculator I've come across. For my money, it's worth every penny.
I've done the free trials of many of the newer fintech calculators such as New Retirement, OnTrajectory, etc; and found them all rather simplistic and not as robust as PG.
Re: Considering MaxiFi and New Retirement calculators...
Unfortunately, none of the Excel substitutes work with Pralana Gold. I used MS Office for Mac 2011 till I recently ungraded to the M2 Mac Mini and was forced to purchase MS Office for Mac 2021 as the 2011 version was unsupported on Apple silicon. I refused to go on the Office 365 subscription service and I only use Excel for PG as I use Numbers for all my other spreadsheets. Upgrading to office for Mac 2021 was relatively cheap at $56.marc in merrimack wrote: Wed Dec 13, 2023 12:34 pmDo you know if Microsoft Excel itself is essential for optimum use of Pralana or whether other spreadsheet software (Google Sheets, Librecalc, etc) are satisfactory? If Excel is recommended, what version(s) would be ok?nanosour wrote: Wed Dec 13, 2023 11:59 am After being a paid user of ESPlanner and MaxiFi for 10+ years, I switched over to Pralana Gold over 2 years ago. I find PG an order of magnitude more capable than any other retirement calculator I've come across. For my money, it's worth every penny.
I've done the free trials of many of the newer fintech calculators such as New Retirement, OnTrajectory, etc; and found them all rather simplistic and not as robust as PG.
In case you haven't seen this, here is a Bogleheads walk thru of PG
https://www.youtube.com/watch?v=t7cT3daYI7I
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Re: Considering MaxiFi and New Retirement calculators...
I was not aware of this video. Thank you.nanosour wrote: Thu Dec 14, 2023 10:32 amUnfortunately, none of the Excel substitutes work with Pralana Gold. I used MS Office for Mac 2011 till I recently ungraded to the M2 Mac Mini and was forced to purchase MS Office for Mac 2021 as the 2011 version was unsupported on Apple silicon. I refused to go on the Office 365 subscription service and I only use Excel for PG as I use Numbers for all my other spreadsheets. Upgrading to office for Mac 2021 was relatively cheap at $56.marc in merrimack wrote: Wed Dec 13, 2023 12:34 pmDo you know if Microsoft Excel itself is essential for optimum use of Pralana or whether other spreadsheet software (Google Sheets, Librecalc, etc) are satisfactory? If Excel is recommended, what version(s) would be ok?nanosour wrote: Wed Dec 13, 2023 11:59 am After being a paid user of ESPlanner and MaxiFi for 10+ years, I switched over to Pralana Gold over 2 years ago. I find PG an order of magnitude more capable than any other retirement calculator I've come across. For my money, it's worth every penny.
I've done the free trials of many of the newer fintech calculators such as New Retirement, OnTrajectory, etc; and found them all rather simplistic and not as robust as PG.
In case you haven't seen this, here is a Bogleheads walk thru of PG
https://www.youtube.com/watch?v=t7cT3daYI7I
You mentioned trying several other fintech tools. Have you made an assessment of Retiree Portfolio Model (RPM) in comparison to PG?
Re: Considering MaxiFi and New Retirement calculators...
I use Maxifi with the Monte Carlo option. I also do not fund the MC to be particularly useful. By its very structure, MC requires entering one's prediction of return and variance for each asset class. But I have no idea what they will be. I can use historical averages, but how long a history to use? Ignore or underweight older data? If so, how old? What to assume for the covariances?
I just gave up and use conservative projections of returns, without MC at all.
Since I use 1% real return to a 60/40 portfolio for long term average, I think it is unlikely that real world will be worse. Seeing how safe I am at 1% gives me an idea of overall safety.
Having used it for a while, I find Maxif easy to navigate.
I just gave up and use conservative projections of returns, without MC at all.
Since I use 1% real return to a 60/40 portfolio for long term average, I think it is unlikely that real world will be worse. Seeing how safe I am at 1% gives me an idea of overall safety.
Having used it for a while, I find Maxif easy to navigate.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either |
--Swedroe |
We assume that markets are efficient, that prices are right |
--Fama
Re: Considering MaxiFi and New Retirement calculators...
As someone who has used MaxiFi for five years or so and Pralana Gold for one, I thought I'd briefly share some quick thoughts about both. I have much enjoyed how much control Pralana gives the user, but won't be renewing (either the Excel version or converting to the online version).
For me, accurate Monte Carlo estimation is really important. For accurate MC estimates, you need three things: The mean annual return for each of the investments in your portfolio, the standard deviation for those returns, and--and this is the biggie--data on the correlation of each of your investments' returns with each of the other holdings (See https://www.kitces.com/blog/monte-carlo ... rojection/ for good explanation of why... the short version is that you need to know if you holdings are likely to plunge all at the same time or if losses in one are likely to offset with gains in others for a given year). In an ideal world, I personally would like to be able to use forward-looking estimates for each of these data points (which I could obtain from Research Affiliates, for example); however, I haven't seen any DYI software that allows the user to plug in this information, including a correlation matrix.
New Retirement's MonteCarlo does not consider your actual holdings or any correlations among them--instead, you are just plugging in an overall guestimate of annual returns and it is assuming that those returns will vary randomly along a standard deviation curve.
In Pralana Gold, you can provide information (historical or forward looking) about the average return for each of your holdings (up to 10) and its standard deviation. BUT, you cannot provide information about the correlations among assets. Instead, you tell Pralana either that your assets are completely correlated or not at all. The first of these means that you'll get low-end estimates that are very unlikely to happen (because your assets aren't going to walk in lock step). The second is setting you up for a nasty surprise as explained by Michael Kitces in the article linked above.
In Maxifi, each asset's return, std deviations, and its correlation with each other asset is estimated by a set of historical annual returns that Maxifi or the user supplies. For the correlations among each pair of assets, Maxifi first estimates how correlated a given asset is to each of six predictor asset classes (US large stocks, US bonds, etc., plus inflation) for which there is long-term data and well-understood correlations. This data is then used to estimate efficiently the correlation among all of your assets. As a bonus, you can shave a percent off each year's returns in the equity data you are entering as historical data to get conservative MC estimates that are less likely to be more rosy than they should be (see: https://www.kitces.com/blog/monte-carlo ... -planning/)
Is Maxifi perfect? No. First, while Maxifi’s creator despises the idea of assuming that anyone would keep spending at the same level until they ran out of money early (at which point, they would be living on just social security), it would be nice if Maxifi would allow the user the option of plugging in a spending number and having Maxifi calculate the probability of failure given the user-specified investment strategy. Without this number, I have to rely on Empower to create risk-based, Montecarlo guardrails (Empower deals with the complexity of your assets' correlations by having you indicate what kind of several predictor assets a given holding is most like or Empower just does this for you when it looks at data).
Second, it would be helpful to be able to assume different rates of expected returns for Roth and traditional IRAs, where the taxation on gains is going to be entirely different. For tax reasons, bonds go into traditional IRAs and equity into Roths.
Long post, but IMHO Maxifi is your best bet if you are looking for software that can tell you what your spending ability would look like over time, depending on how markets do.
For me, accurate Monte Carlo estimation is really important. For accurate MC estimates, you need three things: The mean annual return for each of the investments in your portfolio, the standard deviation for those returns, and--and this is the biggie--data on the correlation of each of your investments' returns with each of the other holdings (See https://www.kitces.com/blog/monte-carlo ... rojection/ for good explanation of why... the short version is that you need to know if you holdings are likely to plunge all at the same time or if losses in one are likely to offset with gains in others for a given year). In an ideal world, I personally would like to be able to use forward-looking estimates for each of these data points (which I could obtain from Research Affiliates, for example); however, I haven't seen any DYI software that allows the user to plug in this information, including a correlation matrix.
New Retirement's MonteCarlo does not consider your actual holdings or any correlations among them--instead, you are just plugging in an overall guestimate of annual returns and it is assuming that those returns will vary randomly along a standard deviation curve.
In Pralana Gold, you can provide information (historical or forward looking) about the average return for each of your holdings (up to 10) and its standard deviation. BUT, you cannot provide information about the correlations among assets. Instead, you tell Pralana either that your assets are completely correlated or not at all. The first of these means that you'll get low-end estimates that are very unlikely to happen (because your assets aren't going to walk in lock step). The second is setting you up for a nasty surprise as explained by Michael Kitces in the article linked above.
In Maxifi, each asset's return, std deviations, and its correlation with each other asset is estimated by a set of historical annual returns that Maxifi or the user supplies. For the correlations among each pair of assets, Maxifi first estimates how correlated a given asset is to each of six predictor asset classes (US large stocks, US bonds, etc., plus inflation) for which there is long-term data and well-understood correlations. This data is then used to estimate efficiently the correlation among all of your assets. As a bonus, you can shave a percent off each year's returns in the equity data you are entering as historical data to get conservative MC estimates that are less likely to be more rosy than they should be (see: https://www.kitces.com/blog/monte-carlo ... -planning/)
Is Maxifi perfect? No. First, while Maxifi’s creator despises the idea of assuming that anyone would keep spending at the same level until they ran out of money early (at which point, they would be living on just social security), it would be nice if Maxifi would allow the user the option of plugging in a spending number and having Maxifi calculate the probability of failure given the user-specified investment strategy. Without this number, I have to rely on Empower to create risk-based, Montecarlo guardrails (Empower deals with the complexity of your assets' correlations by having you indicate what kind of several predictor assets a given holding is most like or Empower just does this for you when it looks at data).
Second, it would be helpful to be able to assume different rates of expected returns for Roth and traditional IRAs, where the taxation on gains is going to be entirely different. For tax reasons, bonds go into traditional IRAs and equity into Roths.
Long post, but IMHO Maxifi is your best bet if you are looking for software that can tell you what your spending ability would look like over time, depending on how markets do.
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Re: Considering MaxiFi and New Retirement calculators...
The online planner for TPAW currently has only two assets—stocks and bonds. While you can't explicitly enter a correlation matrix, the Monte Carlo simulation does preserve the correlation between stock and bond returns in the data that it uses (US stocks and bonds from 1871 onwards).HunterS wrote: Thu Oct 03, 2024 1:46 pm I haven't seen any DYI software that allows the user to plug in this information, including a correlation matrix.
[...]
In Maxifi, each asset's return, std deviations, and its correlation with each other asset is estimated by a set of historical annual returns that Maxifi or the user supplies.
Description of the Monte Carlo simulation from the guide for the "Expected Returns and Volatility" input in the planner:
Because the simulation is picking stock and bond returns from the same month, the correlation between them is preserved.Monte Carlo simulations are based on the historical monthly returns of US stocks and 10 year Treasury bonds from January 1871 to March 2024. But the historical monthly returns are adjusted to match the annual expected return that you enter. The distribution is shifted up or down till the annual expected return for the sampling block size you have selected matches the annual expected return you have entered here.
Then, for the Monte Carlo simulation, 500 sequences of returns are generated by randomly drawing from the return series in five year blocks. A sequence is constructed as follows: The first five years of a sequence is created by randomly drawing a month between January 1871 and March 2024 and using the five year sequence of stock and bond returns beginning that month. For the next five years, we draw another random month and use the five year sequence of stock and bond returns starting that month. This process is repeated till we have a full sequence.
Total Portfolio Allocation and Withdrawal (TPAW)
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Re: Considering MaxiFi and New Retirement calculators...
In my opinion they are all the same. Don't waste your money. Use the fidelity retirement planner and firecalc. It will give you a basic understanding of how much you can spend. You will then adjust accordingly annually. Emoney is also another one that fidelity owns and planvision uses as well.BigJoeAllen wrote: Tue Dec 12, 2023 12:37 pm All:
Anybody have much experience with either of these two advanced calculators? I am retired now, wife working, and want an advanced program to help optimize our withdrawals from various accounts, consider conversions, etc. I recently have used the Flexible Retirement Planner, but it seems to have changed, and does not offer optimization from withdrawals from differing account types, so just not as useful (seems like it did in past versions). Help!
looking forward to any responses!
Joe
The rest want to charge you so they can speculate for you.
I would go as far as saying the vanguard nestegg calculator that takes less than a minute to fill out is as accurate as the rest. Why? because they are all running either historical or monte carlo calculations.
The other I would suggest (also free) is the engaging data dead, broke calculator. It will give you perspective.
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Re: Considering MaxiFi and New Retirement calculators...
You might want to try the free (donations accepted) Flexible Retirement Planner. It's a download planner, so not online, which does require a little more updating from you. It's an excellent option. https://www.flexibleretirementplanner.com/wp/
Oooops, didn't see it was mentioned above.
Oooops, didn't see it was mentioned above.
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Re: Considering MaxiFi and New Retirement calculators...
The biggest challenge with Pralana is some of its simplifying approaches. This is one on asset correlations. Another is related to the handling of capital gains.HunterS wrote: Thu Oct 03, 2024 1:46 pm In Pralana Gold, you can provide information (historical or forward looking) about the average return for each of your holdings (up to 10) and its standard deviation. BUT, you cannot provide information about the correlations among assets. Instead, you tell Pralana either that your assets are completely correlated or not at all. The first of these means that you'll get low-end estimates that are very unlikely to happen (because your assets aren't going to walk in lock step). The second is setting you up for a nasty surprise as explained by Michael Kitces in the article linked above.
But overall, it has the best tax engine (by far) and optimization algorithms. I find these much more important than fine-tuning monte carlos, though I respect different views here.
The other issue used to be the Excel-based platform. But I've been using the web-based version for a few months as an early subscriber, and the new UI is great.
TPAW Planner and Pralana are my indispensable tools.
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Re: Considering MaxiFi and New Retirement calculators...
Has anyone used the Roth Conversion Optimizer from MaxiFi Planner and do you recommend it given the $149 annual subscription cost? The software tool is referenced in an NYT article on Roth Conversions by Peter Coy on 31 Jan. It posits that it can be a good strategy to make very large Roth Conversions even when that takes you into higher marginal tax rate brackets.
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Re: Considering MaxiFi and New Retirement calculators...
It has been pointed out on BH a few times, but a main challenge with roth conversion tools is managing different asset allocations across accounts to maintain tax efficient placement (eg, bonds in deferred) and desired overall AA. You otherwise get garbage conversion recommendations. Pralana has a solution for this.Utilitymaximizer wrote: Sat Feb 01, 2025 9:06 am Has anyone used the Roth Conversion Optimizer from MaxiFi Planner and do you recommend it given the $149 annual subscription cost? The software tool is referenced in an NYT article on Roth Conversions by Peter Coy on 31 Jan. It posits that it can be a good strategy to make very large Roth Conversions even when that takes you into higher marginal tax rate brackets.
I've looked for other commercial products that handle this right, as a sense check for (or maybe even an improvement on) Pralana. I've looked closely at what MaxiFi says on its site about their Optimizer. Their detailed case study involves a retiree who invests only in TIPS. That certainly avoids the problem, but it doesn't give any comfort that their tool can handle more realistic allocation scenarios.
I also was not able to confirm that MaxiFi considers IRMAA and ACA PTCs.
Unfortunately, with roth conversions, simplified advice can be worse than none at all.
Re: Considering MaxiFi and New Retirement calculators...
MaxiFi considers IRMAA. I don't think it considers ACA.Circle the Wagons wrote: Sat Feb 01, 2025 12:05 pm
I also was not able to confirm that MaxiFi considers IRMAA and ACA PTCs.
Unfortunately, with roth conversions, simplified advice can be worse than none at all.
Re: Considering MaxiFi and New Retirement calculators...
That is my understanding as well, but I believe I heard in a recent webinar that they are working on adding ACA PTC impacts - as well as doing a combined optimizer for Roth and retirement account withdrawals. The latter seems to be a formidable challenge though so they may or may not succeed. As for ACA, it hasn't been all that hard for me to add reductions in ACA PTCs as ballbark special expenses. In the grand scheme of things though, I could just ignore them and still come close enough for what I need to know. It is easy to forget that all of these tools are just making educated guesses - even if some are better/more thorough than others.colejr wrote: Sun Feb 02, 2025 10:37 amMaxiFi considers IRMAA. I don't think it considers ACA.Circle the Wagons wrote: Sat Feb 01, 2025 12:05 pm
I also was not able to confirm that MaxiFi considers IRMAA and ACA PTCs.
Unfortunately, with roth conversions, simplified advice can be worse than none at all.
Along those lines, in at least a couple of the recent webinars they've said that when working with clients, they've mostly found that their Roth conversion optimization analyses tend to come out as "go big or go home." That fits with how I feel about Roth conversions in general. Given all of the unknowns, I'm not going to bother unless it seems likely that there will be a substantial benefit and that's not going to happen unless I go big on converting.
Re: Considering MaxiFi and New Retirement calculators...
FYI, I started a thread discussing this article here: viewtopic.php?t=448693Utilitymaximizer wrote: Sat Feb 01, 2025 9:06 am Has anyone used the Roth Conversion Optimizer from MaxiFi Planner and do you recommend it given the $149 annual subscription cost? The software tool is referenced in an NYT article on Roth Conversions by Peter Coy on 31 Jan. It posits that it can be a good strategy to make very large Roth Conversions even when that takes you into higher marginal tax rate brackets.
Would love your input if you've reviewed the article (most of the responders haven't read the article and are just posting their thoughts)
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Re: Considering MaxiFi and New Retirement calculators...
Good to hear confirmation of IRMAA coverage from MaxiFi users.rustwood wrote: Sun Feb 02, 2025 2:22 pmThat is my understanding as well, but I believe I heard in a recent webinar that they are working on adding ACA PTC impacts - as well as doing a combined optimizer for Roth and retirement account withdrawals. The latter seems to be a formidable challenge though so they may or may not succeed. As for ACA, it hasn't been all that hard for me to add reductions in ACA PTCs as ballbark special expenses. In the grand scheme of things though, I could just ignore them and still come close enough for what I need to know. It is easy to forget that all of these tools are just making educated guesses - even if some are better/more thorough than others.
Along those lines, in at least a couple of the recent webinars they've said that when working with clients, they've mostly found that their Roth conversion optimization analyses tend to come out as "go big or go home." That fits with how I feel about Roth conversions in general. Given all of the unknowns, I'm not going to bother unless it seems likely that there will be a substantial benefit and that's not going to happen unless I go big on converting.
How does it handle different AAs and return expectations in deferred vs. roth vs. taxable when providing a conversion recommendation? Not doing this right can lead to "go big or go home" results.
Re: Considering MaxiFi and New Retirement calculators...
I don't think it does, but I really don't know. In the planning profiles you can specify different rates of return for retirement and non-retirement accounts, but not deferred and Roth. I didn't catch all of what they were saying about upcoming changes though, so I'm wondering if they mentioned anything along those lines.Circle the Wagons wrote: Sun Feb 02, 2025 11:26 pm How does it handle different AAs and return expectations in deferred vs. roth vs. taxable when providing a conversion recommendation? Not doing this right can lead to "go big or go home" results.
Can you elaborate or point me to some discussion of how differing return expectations can lead to go big or go home results? I guess I can see how it might matter for a case where someone has all stock in their taxable and all bonds in their Roth, but I suspect most people are far far from that extreme and many seem to maintain the same AA in each of their accounts (likely to their detriment). Presumably this issue is somewhat dependent on the assumption that stocks will outperform bonds in the long run - in addition to the different tax treatments.
Of course the default/main focus in Maxifi is strongly rooted in the idea of planning with safe rates of return - essentially provided by assuming one is tucking everything away in 10 year TIPS. If they don't pay their guaranteed rate, I doubt any of our planning will matter much. That certainly isn't what everyone wants to see, but it is just a starting point and it fits with my inclination towards worst-case-scenario planning. That may be much less than ideal for Roth conversion planning though.
Just to avoid confusion, Maxifi also includes Monte Carlo analyses for both upside and full-risk investing. Within those reports you can specify the returns for each account, but those settings only appear in those reports so I highly doubt they are currently being applied when running the Roth optimization report.
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Re: Considering MaxiFi and New Retirement calculators...
The classic scenario is holding bonds in deferred and stocks in roth, for tax efficiency. A "first generation" roth conversion tool will simply sniff out the higher expected return of the roth account and encourage you to convert everything to get it over there. But of course, now your overall AA has shifted heavily toward stocks vs. the risk profile you really want.rustwood wrote: Mon Feb 03, 2025 7:09 amI don't think it does, but I really don't know. In the planning profiles you can specify different rates of return for retirement and non-retirement accounts, but not deferred and Roth. I didn't catch all of what they were saying about upcoming changes though, so I'm wondering if they mentioned anything along those lines.Circle the Wagons wrote: Sun Feb 02, 2025 11:26 pm How does it handle different AAs and return expectations in deferred vs. roth vs. taxable when providing a conversion recommendation? Not doing this right can lead to "go big or go home" results.
Can you elaborate or point me to some discussion of how differing return expectations can lead to go big or go home results? I guess I can see how it might matter for a case where someone has all stock in their taxable and all bonds in their Roth, but I suspect most people are far far from that extreme and many seem to maintain the same AA in each of their accounts (likely to their detriment). Presumably this issue is somewhat dependent on the assumption that stocks will outperform bonds in the long run - in addition to the different tax treatments.
Of course the default/main focus in Maxifi is strongly rooted in the idea of planning with safe rates of return - essentially provided by assuming one is tucking everything away in 10 year TIPS. If they don't pay their guaranteed rate, I doubt any of our planning will matter much. That certainly isn't what everyone wants to see, but it is just a starting point and it fits with my inclination towards worst-case-scenario planning. That may be much less than ideal for Roth conversion planning though.
Just to avoid confusion, Maxifi also includes Monte Carlo analyses for both upside and full-risk investing. Within those reports you can specify the returns for each account, but those settings only appear in those reports so I highly doubt they are currently being applied when running the Roth optimization report.
Pralana lets you set an overall AA target across all accounts, an account prioritization for placement of stocks vs. bonds, and expected returns at the asset class vs. account level. Then, when you run the roth optimizer, it doesn't run off the rails.
Re: Considering MaxiFi and New Retirement calculators...
You are correct. You can however simulate ACA premium adjustments by making an income adjustment over the years affected. I am a huge fan of Maxifi.colejr wrote: Sun Feb 02, 2025 10:37 amMaxiFi considers IRMAA. I don't think it considers ACA.Circle the Wagons wrote: Sat Feb 01, 2025 12:05 pm
I also was not able to confirm that MaxiFi considers IRMAA and ACA PTCs.
Unfortunately, with roth conversions, simplified advice can be worse than none at all.