Monte Carlo Simulation - Additional Inputs

A retirement planner that’s a little more flexible

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Documentation—Additional Inputs

This section describes some additional user inputs that can give you even more control over how the planner simulates your retirement. This section is optional and you don’t need to enter anything in this page unless you want to capture additional details about your plan that weren’t entered on the main input form.

There are two tables on this page. The first table allows you to provide additional information about the portfolio return, inflation, and tax rates that you expect over the life of your plan. The second table allows you to enter more details about the cash flows (savings, income and expenses) that you expect over the course of your plan.

Each entry in the two tables can be temporarily disabled by clicking on the checkbox under the column labeled enabled. Any entries that are not marked as enabled will be ignored during simulation runs.

Additional Inputs — Portfolio Return, Inflation and Taxes

To add more details for portfolio return, inflation, and taxes, use the controls to the left of the rate table to specify what type of rate you’d like to add, the start and end year of your plan that you want the rate to apply, the value for the rate, and depending on the rate type, a standard deviation. Once you’ve configured the options for the new entry, click the add button to add it to the rate table.

The entries in the Rate Table are applied after the default entries in the main input table when the simulation is run. Further, the entries in this table are applied in the order they are listed. This allows you to enter multiple specifications for a given rate type to cover different years. For example, suppose that you selected 10% for portfolio return and 15% for standard deviation on the main planner input page. By default, this setting applies for the entire plan. However, you can create an additional specification for portfolio return on the additional inputs page that applies from the first year of retirement to the end of the plan. This will result in two different rates of return being applied over the life of your plan. The default rate will be applied in the early years of the plan, while the new rate will be applied in the later years.

You can (and should) verify that the simulation did what you expected by examining the year by year data on the “Detailed Output” tab after you run the simulation. This tab allows you to see what data was used in each year for inputs, as well as what outputs were generated for each year.

Additional Inputs — Savings, Retirement Income, and Expenses

The table on the bottom of the additional inputs page can be used to provide more details about the cash flows that you expect over the life of your plan. You can use this table to add additional Savings, Retirement Income, and Expense to your plan.

To add more details for these items, use the controls to the left of the table to specify which item you’d like to add, the range of years over which the cash flow will occur, the annual amount of the cash flow, and for retirement income, the percent of the amount that is considered taxable for income tax purposes. Once you’ve specified the details for the new entry, click the add button to add it to the table.

Note that for pension income and other income, you can configure whether the amount is automatically adjusted for inflation. To specify fixed payments that are not adjusted for inflation, choose the “no cola” or no cost of living adjustment option in the cash flow type dropdown.

The entries in the Cash Flow Table are applied in addition to the amounts specified on the main input page. If you want to only use the cash flows that you add to the table, be sure to go back to the main page and zero out the cash flows for savings, expenses, and retirement income.

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