Yesterday I analyzed Mint and Personal Capital as possible options for your account aggregator. I had been a loyal consumer of Mint but the Personal Capital Retirement Planner is the best I’ve seen so far on a free website. Going forward I will utilize both sites. Let me walk you through some of the features of the Personal Capital Retirement Planner.
The Retirement Planner will have you put in things like how much do you currently have to draw from, how much do you plan to save each year, certain income events in the future, and your spending goals into retirement:
It then runs 5,000 scenarios, some good market scenarios and some bad market scenarios, to give you a distribution of possible outcomes. The above inputs were my baseline plan, to retire in two years while saving 60k each of the next two years. The rental income I inputted was before tax and adjusted for inflation, although you could change it to be after tax. Here’s what I saw:
It showed I had successes in 76% of the simulations, which actually surprised me. The dark blue was showing the median value of the funds I’d have to draw from, meaning 2500 scenarios were higher and 2500 scenarios were lower. The light blue was the 10th percentile of the value of the funds. You could also see it by asset location:
This view reminded me why I’m currently exploring the Roth conversion ladder. I think I need the ability to access my 401k money, a tax deferred account, earlier than 59.5 without the 10% early withdrawal penalty (currently if you want to withdrawal money in a 401k before age 59.5 one has to pay an additional 10% penalty on top of the taxes that would be incurred). Actually on this view it got me questioning how the cash is being pulled out in these simulations if, for example, I only have cash remaining in a 401k. I will have to definitely explore their white paper more to fully understand. I will put a link to that white paper in the bottom of the blog.
You can also explore the cashflows, for any plan you’ve constructed, through their detailed cash flow table:
The ability to add certain life events I found very helpful for quickly going through possible future scenarios. Here’s a list of the possible income events one could include:
Every income event could be designated as before tax or after tax except Social Security, which is always before tax. One could also tinker with various assumptions:
You could see what happens if you moved to one of the states with no state tax (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming according to their white paper) and how that affects your success rate, or if you wanted to see the impacts of quitting your job to take a couple year break.
One has the ability to copy prior settings from any other plan they’ve constructed, alter it in some way, and then compare it to another plan they’ve constructed. Here’s my original plan versus one where I quit now and become a teacher and soccer coach in two years for fifteen years. One can see I now have successes in 99% of the simulations, compared to 76% before and unsurprisingly more money, as I’d be working longer .
For simple scenario building, and getting the big picture decisions correct I’d say this is top notch. One criticism I do have is it doesn’t explicitly walk you through mortgage payments, when those would be paid off, and thus how that would affect future spending. I think one could play around with the income events to get certain desired future cashflows, for more complicated strategies/decisions, but it might take some time. I also don’t think they have enough literature/background on what social security payments are and how they define “average salary”; I had to go to the social security website to get a better grasp of that. https://www.ssa.gov/benefits/retirement/estimator.html
All in all I love building different plans and then using the comparison tool to compare and contrast. I think I will utilize this going forward.
Link to their white paper where one can look through their different assumptions:
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