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Looking for a Retirment Planning tool that supports modeling of different income sources, forecasts Medical Expenses and LTC costs, Expected Returns in Monte Carlo. I’ve read reviews about a few – Maxifi, Boldin, Wealthtrace. Has anyone tried those tools or know of others?
I’ve used a variety of tools over the years, and decided my best course was to pick at least three to continue using as I began retirement. I run each, and then pick a number among the three projections for my next annual withdrawal.
When one varied, it meant I should dig deeper to understand why.
But most often, one would become obsolete and I would take the opportunity to find and vet another tool.
I like the safety of having three predictions. So long as I’m spending based on three recommendations, I feel that I’m on safe ground.
How do you create a margin for surprises when these projections turn out wrong? Averaging three wrong numbers is still wrong. Each tool is doing extrapolations from some market history (how much? what periods?) and from unstated assumptions about the future. What if those are no longer true?
For example, stock valuations – the ratio of price to earnings – has been slowly growing for some years, goosing stock returns; what if that stops? Or reverses? The effect will be a drop or steady decline in stock prices.
What if our lower birth rate and less immigration cause the economy to grow more slowly over the next 30 years, a headwind for stocks? Or the long-term cost of more frequent $1B+ wildfires, hurricanes, and floods lowers stock earnings and dividends? Or inflation returns more often but the tools assume a low inflation rate averaged using data from 2009-2020?
Unless a tool is completely transparent about its data sources and all its key assumptions, they’re doing more harm than good. You’re literally better off rolling dice.
none of those can forecast your medical expenses or LTC costs.
Your best bet assuming age 65 is to take the Part B and D premium and current Plan G medigap premium in your area and escalate by 8% a year. Combined those coverage will pretty much equal your out of pocket costs given your Rx OOP will be limited to $2,000 a year.
LTC is based on your risk. If you are in the retirement age area, buying coverage may be too expensive.
I know everyone’s needs are different but I looked at several of the software options out there (Boldin, Pralana, MaxiFi, Projection Lab, etc) and watched a lot of the Rob Berger reviews on YouTube. I concluded that they didn’t work for me for several reasons:
In any case, as a retiree, what I was really looking for was short-term tax projections and some calculations that would help me manage my optional income (self employment and Roth conversions) w none of the fluff, bells and whistles, and learning curve of commercial software.
I built a simple Excel spreadsheet that is, in effect, an interactive tax return. Have months across the top columns and income sources and tax withholding in the rows. I populated the entire year for the known figures (social security, pension, etc. with related tax withholding) and then added YTD data for interest, dividends, self employment, Roth conversions, etc). Each month, I update those items. The spreadsheet then does all the related tax calculations including self employment tax, qualified business income deduction, how much of the $12K OBBB Senior Deduction still applies, etc. and gives my estimated tax so I can adjust withholding if need be. It then estimates how much more income I can handle before I hit various tax brackets, begin to phase out of the $12K Senior Deduction, and/or hit an IRMAA threshold. I then use that to make decisions on Roth conversions or additional self employment income.
If taxes need to be adjusted, I do it through adjusting my pension withholding, not estimated tax payments. Easier, and I believe gets you around the IRS issues with underpayment as my understanding is taxes paid through withholding are assumed to be appropriately applied to income as opposed to quarterly payments which need to directly relate to quarterly income.
Spreadsheet took a morning to create prob because I’m no Excel pro. I watched a couple YouTube videos and went at it. Also the MSoft Excel Co-Pilot “bot” follows you around on Excel like your smarter older sibling helping you with your homework. I then popped back in a few more times over the week to pretty it up w some formatting and window dressing.
I know this approach may be too simple and limiting for some but I’m happy with the way it turned out and it’s giving me what I need but nothing more. And the price was right! 🙂
Mark, would you be willing to share a blank version of the spreadsheet with the formatting already in place? That sounds much more of what I need rather than Boldin or emoney.
Unfortunately, I customized it too much for it to be easily transferable in its current state without significant alterations. It assumes MFJ, both over 65, no LT cap gains, a max marginal tax bracket of 22%, and social security income taxed at 85%. Also, our pensions have small portions that are non-taxable and that factor is also incorporated into the formulas for determining gross taxable income. It’s not constructed to be plug and play for all income scenarios.
Totally understand!
Mark, could you provide a link to the Mike Piper article. He is pretty prolific and I get a lot of hits when I search on assumptions on his site.
I have similar spreadsheet I use to project taxes through year. I started this 8 years ago when I stopped working full time, and formed a consulting LLC. It was my first experience with irregular income and self-employment, so I wanted to make sure I was submitting satisfactory estimated payments. I also used it to make decisions on late year solos 401k contributions.
It’s evolved over the years but I haven’t updated it for the OBBB additional $6K deduction. You are correct that the retirement planing tools aren’t designed for the kind of detailed current year tax planning you and I execute. Those tools have a different focus, and are appropriate for future planning, and periodic checks on your plan.
AI hadn’t heard the term Systematic WAGs before. We did Sophisticated WAGs in my industry!. It’s a good joke, but in my experience an experienced, knowledgeable person can make a pretty good WAG much of the time.
In my line of work (engineering) almost everything we do is based on assumptions and for us SWAG is a “Scientific” WAG. The irony is palpable and intentional!
And maybe it was “sophisticated” WAGS. I left that career 38 years ago so my memory is often less than stellar. :0
And here’s a related one.
https://obliviousinvestor.com/predicting-tax-legislation-is-harder-than-timing-the-market/
https://obliviousinvestor.com/long-term-tax-planning-guessing-focus-near-term/
I think this one.
Let me dig a little, Rick. I accidentally stumbled upon it previously so its not handy or bookmarked.
I’ll second the prior recommendation of Pralana Online. I’ve used it for five years and the level of modeling detail it allows exceeds anything I’ve ever needed or seen elsewhere. Not for the faint of heart, for sure, but it is comprehensive and accurate. Absolutely outstanding customer service, as well. I’ve seen customer suggestions and reported bugs addressed in a matter of days (or in one case, hours)The developers communicate with customers directly.
A lot of this depends on how much of a numbers and software nerd you are.
On one end of the spectrum are those who roll their own retirement model in Excel. On the other end, apart from turning the whole thing over to an AUM advisor, are the plug and play options like Boldin and Fidelity’s wealth planning platform. While the latter do a lot of the work in the background, you still may find yourself needing some advice when it comes to things like asset allocation, tax loss harvesting, decumulation strategy and ROTH conversions.
If you’re willing to take the time to do some learning and experimenting, tools like Pralana Gold and ficalc.app are available. Pralana is particularly powerful because it includes the ability to model ROTH conversions and taxes at state and federal levels.
Then there are the pro tools. If you sign up for Plan Vision, they give you access to e-Money, an platform used by CFPs. I really like PV – been with them for a couple years now. For less than $100/yr they give me access to their full staff of CFPs and tax pros for 1:1 consults as well as the eMoney platform. Still the best deal going, I think.
Finally, I just signed up with IncomeLab, another pro platform that doesn’t have a consumer-facing offering. Except that if you ask them they will sell you an individual, personal use only license for $20/month. Dirt cheap.
This THE best planning platform l’ve found for retirees who are in decumuatlion mode. ROTH conversion modeling, tax modeling, stress testing, withdrawal strategy – this tool does it all.
The best part is that is uses a MC risk-based spending guardrails methodology. Instead of running an MC and giving you a percent chance of success/failure (I mean really – what is the right percentage there?? Impossible to know), this approach shows you what the chance is that you’ll need to adjust your spending – up or down – in order for your plan goals to be met. This is huge. It means I can quit worrying about whether or not my plan is going to work, and focus instead on just living my best retired life and spending right up to whatever IL tells me my limit is. So far, this limit has been way higher than I ever would’ve attempted otherwise.
FYI, eMoney platform through PlanVision is a limited version for clients. It doesn’t allow Roth conversion modeling or scenarios or some other advanced features and clients need to ask the advisors to complete those features on client’s behalf. In addition, access to the advisors are limited in the number of meetings and the duration of the meetings; 30-40 min. max and only a few, two/three meetings can be scheduled during the year. There’s one CPA available for limited consultations on tax-planning and clients need to do most of the research and calculations on their own. PlanVision charges very low fees (<$500 first yr and way less following years) in order to run a business model with limited services. Consequently, it’s suitable for DIYers with non-complex financial plans.
I use the Fidelity Wealth Planner tools. I am happy with it, and I am starting to use it, along with my Fidelity wealth planner, to model Roth conversions before I reach RMDs in 10 years. Do any of the retirement tools noted offer better planning tools?
Hi Charles, is Fidelity Wealth Planner the same as Fidelity Retirement Planner tool? If not, how does one get access to the Wealth Planner tool at Fidelity? Do you have to be a client of Fidelity’s Wealth Management or Private Wealth Management accounts to get access to the tool for free? I don’t know where I can model Roth conversions in my Fidelity account.
Use whatever ones you like, then in the end program about the average amount you spent over the last five years and project it forward. Since none of the so called models met my needs, I developed my own on Excel. That worked for me. Do not be surprised if you spend more not less in retirement. Remember Time is money, and retirement is Time!
I have used Maxifi to model different scenarios when I have a decision to make (e.g., Roth conversions). The program’s default assumptions are conservative which is good, but as far as I can tell, all of them can be changed. I find it useful to run scenarios with different assumptions to learn how much difference it would make if, e.g., inflation runs much higher in the future than the program assumes and/or the return on equity investments is much less than the default. Or what if I receive a specific inheritance in 2 years or 10. I think the key with all these programs is to remember the adage that all models are wrong, but some are useful. You may not need to use any of these programs yearly; I used Maxifi once a few years ago for a particular decision, then did not feel the need to consult it again until last year when I wanted to model Roth IRA conversions. As I mostly retire after this year, I don’t know how often I’ll want to use it to update my withdrawal strategy for what’s happened in the interim–probably depends on how different reality turns out versus the median scenario I projected.
After entering all his data, my brother booked a one-hour session with a coach from Maxifi which he found very useful. They spent the first half hour making sure he had entered the data on his somewhat complicated financial situation correctly into the program (some things needed fixing), then the next half hour they spent reviewing and understanding the detailed output. He thought the hour was very worthwhile.
I think FIRECalc is the best one out there. Allows for many different income sources, timing of those sources, and cost and spending models. And it is free.
I enjoy using Boldin for my DIY financial planning. You can book a coach to help make sure you are setting things up properly at the beginning. They also have a free help center and they offer classes and live events. It handles all the new tax code. I find it easy to try different strategies for Roth conversions and it is helping me be aware of tax consequences (ie IRMAA). It is also helpful to look at projected savings in my different funds over time. The projected RMDs are also helpful.
I use Boldin, formerly New Retirement. It’s very inexpensive and very comprehensive. I hired one of their staff (approx $180) to walk me through my assumptions, which is very key. She was very thorough and helpful, and gave me the confidence to believe in the projections once it was all set up.
Hiring a staff member was probably a wise decision. How much time did you receive for that price and could you ask followup questions?
The “Time to Realignment ” countdown app was the most helpful and fun.
I have not tried any, having relied on our FA but I do participate regularly in retirement planning forums. A couple others frequently mentioned are Projection Lab (Rob Berger talks it about it and Boldin on his YouTube Channel) and Pralana. Good luck.
I recently signed up for Maxifi, and it seems to be in line with what other tools such as ficalc and firecalc came up with.
I still need to run through the videos they have to get you started, but so far my one question was promptly answered by customer service.
One thing I noticed is that they don’t (and probably can’t) cover all tax implications for all states, such as the reduction in property taxes at age 65 in NJ.
The reports it generates have me looking at retirement in early 2028 – might as well hold out for the bonus at the end of January!
I’m still going to find a good Fiduciary Financial Planner and have them run all our numbers to see how things look.
At this point, I’m fed up with the tactics my company is using to try to get people to quit (RTO, forced ranking with 25% mandated as below expectations, etc.), so I’m looking forward to being done with the job. I could move elsewhere, but don’t feel like learning another business and all its processes at this point.
To the amusement of some, and surprise of no one (I’ll wager), I’ve rolled my own in Excel. Tried all of them and they each have their virtues. But there are important assumptions made about the user, ones which don’t fit in the typical parameters you might see exposed in settings.
Looking back, I’d also say I have a deeper understanding now about personal finance through the experience.
The free ones offered by Fidelity and Vanguard et al. are good enough to get you going. As you approach 50, I’d suggest working at the next level of detail to answer questions like:
(No substantive change in this edit, just testing a site formatting bug in bulleted or numbered lists to help Jonathan.)
I’ve used MaxiFi for a number of years. I like it, but it uses a different approach that you need to get comfortable with. It is very comprehensive, with detailed tax models for federal and state. I let my subscription lapse, but am considering it to try out the new Roth conversion tool.