I’ve tried every free planning tool out there. I’m not sure comparing a paid professional application to their free garbage is worth anyone’s time. It’s free junk vs high quality accuracy at a nominal cost. I look forward to digging into http://maxifi.com. I have found that the free version of newretirement.com helpful.
Thank you for this insightful article. As a CFP, I speak with individuals who are getting close to retirement and prior to my analysis they thought they were using tools such as the Fidelity retirement planner to measure their retirement readiness. However, as you have called out, they do nothing to help answer the asset withdrawal (spending) strategy. Online calculators (such as Fidelity) do a good job to enable DIY retirement planning by projecting retirement savings. They illustrate how adjustments could improve outcomes. On the spending side, they are of little value. There are many people who come to me thinking if they can live off 4% of their investment income, they are ready to retire. I am sure you could write a book on people using the so called "4% Rule" to manage their spending and readiness for retirement. That is an article for another day .....
Tools such as Fidelity's Retirement Planner do a good job showing wealth accumulation in a variety of potential market cycles (significantly below average, below average and average) but they do not come close to answering the question they everyone should be asking .. "Can I safely retire and what their spending levels should look like". You called this out beautifully and I know this article will open many people's eyes why they need to take an economics-based approach.
As a Certified Financial Planner, I use MaxiFi when I am completing my client's overall financial plan. I continually hear that my clients love being able to understand what their discretionary spending can look like in today's dollars projected for the rest of their life. MaxiFi also makes it super easy to update the projections on an annual basis.
While there are numerous features of MaxiFi that help your users with retirement planning, I think the tax modeling and projections are most valuable. The ease to create multiple scenarios to determine the best accounts to hold investments and to determine the ideal Roth conversion strategy to build the highest lifetime discretionary spending tops my list of features available.
"In addition, Uncle Sam could do something he’s never done — default on U.S. Treasuries."
Larry: that statement is simply untrue. During World One the Federal government sold bonds to finance the war effort. During the 1920s the bonds were refinanced into a "Fourth Liberty Bond" issue which was to mature in 1938. The bonds contained a clause stating that: "The principal and interest hereof are payable in United States gold coin of the present standard of value."
Those coins were the $10 Eagle, $5 Half Eagle, and $20 Double Eagle. The $10 eagle was, by law, 258 grains (16.7 g) of 90% gold, a pure gold content of 0.48375 troy ounces (15.046 g). The implicit value of gold was $20.67/troy oz.
In 1933, FDR with congressional authorization, declared that henceforth the price of gold would be $35/oz. He also proscribed the private ownership and use of gold for monetary purposes. The Liberty bonds were to be paid in paper money. The result was a default of 41% of the value of the bonds.
The US Supreme Court ruled that Roosevelt's actions were unconstitutional but, that the bond owner's loss was "unquantifiable", and that to repay them in dollars according to the 1918 standard of value would be an "unjustified enrichment" and the Federal Government could default without paying any penalty for it.
Three lessons from this episode: First, don't believe them when they say we will never default or that we have never defaulted before. Second, The Federal Government has defaulted and can and will do it again. And, third, don't expect the Supreme Court to protect your precious constitutional rights when nut cutting time comes again.
Hi Mike,
I'd like to compare New Retirement vs MaxiFi for a specific case. Pls call me at 617 834-2148 to discuss. best, Larry
Bob, Thanks so much for your comment. I'm going to post the last part under testimonials at maxifi.com. best, Larry
I’ve tried every free planning tool out there. I’m not sure comparing a paid professional application to their free garbage is worth anyone’s time. It’s free junk vs high quality accuracy at a nominal cost. I look forward to digging into http://maxifi.com. I have found that the free version of newretirement.com helpful.
Larry,
Thank you for this insightful article. As a CFP, I speak with individuals who are getting close to retirement and prior to my analysis they thought they were using tools such as the Fidelity retirement planner to measure their retirement readiness. However, as you have called out, they do nothing to help answer the asset withdrawal (spending) strategy. Online calculators (such as Fidelity) do a good job to enable DIY retirement planning by projecting retirement savings. They illustrate how adjustments could improve outcomes. On the spending side, they are of little value. There are many people who come to me thinking if they can live off 4% of their investment income, they are ready to retire. I am sure you could write a book on people using the so called "4% Rule" to manage their spending and readiness for retirement. That is an article for another day .....
Tools such as Fidelity's Retirement Planner do a good job showing wealth accumulation in a variety of potential market cycles (significantly below average, below average and average) but they do not come close to answering the question they everyone should be asking .. "Can I safely retire and what their spending levels should look like". You called this out beautifully and I know this article will open many people's eyes why they need to take an economics-based approach.
As a Certified Financial Planner, I use MaxiFi when I am completing my client's overall financial plan. I continually hear that my clients love being able to understand what their discretionary spending can look like in today's dollars projected for the rest of their life. MaxiFi also makes it super easy to update the projections on an annual basis.
While there are numerous features of MaxiFi that help your users with retirement planning, I think the tax modeling and projections are most valuable. The ease to create multiple scenarios to determine the best accounts to hold investments and to determine the ideal Roth conversion strategy to build the highest lifetime discretionary spending tops my list of features available.
I look forward to your next article!!!!
Bob Goldberg
Blue Coast Financial Planning
An insightful testimonial to the value of economics based financial planning!
"In addition, Uncle Sam could do something he’s never done — default on U.S. Treasuries."
Larry: that statement is simply untrue. During World One the Federal government sold bonds to finance the war effort. During the 1920s the bonds were refinanced into a "Fourth Liberty Bond" issue which was to mature in 1938. The bonds contained a clause stating that: "The principal and interest hereof are payable in United States gold coin of the present standard of value."
Those coins were the $10 Eagle, $5 Half Eagle, and $20 Double Eagle. The $10 eagle was, by law, 258 grains (16.7 g) of 90% gold, a pure gold content of 0.48375 troy ounces (15.046 g). The implicit value of gold was $20.67/troy oz.
In 1933, FDR with congressional authorization, declared that henceforth the price of gold would be $35/oz. He also proscribed the private ownership and use of gold for monetary purposes. The Liberty bonds were to be paid in paper money. The result was a default of 41% of the value of the bonds.
The US Supreme Court ruled that Roosevelt's actions were unconstitutional but, that the bond owner's loss was "unquantifiable", and that to repay them in dollars according to the 1918 standard of value would be an "unjustified enrichment" and the Federal Government could default without paying any penalty for it.
Three lessons from this episode: First, don't believe them when they say we will never default or that we have never defaulted before. Second, The Federal Government has defaulted and can and will do it again. And, third, don't expect the Supreme Court to protect your precious constitutional rights when nut cutting time comes again.