Have FRP results been compared to other tools?

A retirement planning tool is only as good as its assumptions and inputs. Share your thoughts or ask questions about the internals of the simulation, built in planner assumptions, or planner inputs.
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GDK
Posts: 12
Joined: Wed Jun 07, 2017 10:29 pm

Have FRP results been compared to other tools?

Post by GDK » Tue Jun 13, 2017 9:21 pm

FRP is far and away one of the best tools I've seen. I'm sure that folks have done careful comparisons between FRP and other tools (MoneyPro? Others?) using the same inputs. What were the results? Were differences explainable? Were there certain aspects of the tools where comparisons typically did not agree?

I've been impressed that a number of the posts that I've seen in this forum are questions from financial planners who are using FRP. I would like to think that they gravitate to it's accuracy although certainly it also must involve the expense they save. I am not a financial planner, I only use FRP for my own retirement planning.

Thank you!

NickK
Posts: 6
Joined: Tue Feb 13, 2018 10:12 am

Re: Have FRP results been compared to other tools?

Post by NickK » Tue Feb 13, 2018 1:22 pm

Given that tools like this help you guess the future, one cannot really say one is better than the other until well into the future... if then. I suppose you could back test them against previous years but that is still only as good as those year's actual performance, we can't say what happens going forward and they do not include the "you" factor. They are simply a better guess than a fixed investment return model.

I prefer to use multiple tools and compare their results. If they show a tight pattern, then you are probably in the ballpark somewhere in the cluster. None are right, none are wrong. If one is way outside the cluster, then that tool, or its inputs, is suspect. The results may or may not be wrong, but it is worth digging into why it so far off. We all know to diversify investments. The same is true for tools.

Tightness of the pattern is hard to quantify. For example, for similar success probabilities, you may find spending rates that vary +/- $15,000 around $125,000. To me that is OK since my actual spending rate may vary similarly and I'm OK with that. You can plot success probability against spending rate to see your pattern. Remember that these tools should not be looked at as being accurate to xx decimal places. They are a guess, not a statement of fact.

Another key to using these type tools, AFAIC, is to use them periodically. You should not run them once at age XX and never review them again. Redo them annually to reduce compounding error (deviation from actual past performance) that will occur as you progress forward.

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