How to enter spouse 401k account info?

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mjonis
Posts: 7
Joined: Wed Apr 10, 2019 7:07 pm

How to enter spouse 401k account info?

Post by mjonis » Wed Apr 10, 2019 7:52 pm

I see the additional input section.

I'm confused because the "main" screen seems to be comprised of the 7 additional inputs.
However, I don't see anywhere in the additional inputs where you are asked for Portfolio balances and contributions.

For example:
I'm 46, I have 66k in my 457b and contribute 15% of my paycheck (currently 15,400).
My spouse is 51. Has 127,000 in his 401k and only puts in 1% but gets a 6% match.
I put my retirement age at 65

It *sounds* like (from reading) that I actually add the values of both 457 and 401k and put that on the main page and then have to figure out the actual dollar amounts of the 457 and 401k dollar contributions and put that on the main page and then add ONE additional input for Portfolio value and say Start Age is 51 and retirement is 70
?
Very very confusing how to add spousal information, IMO (although I see lots of requests for easier input but doesn't look like the enhancement from 2014 made it in yet)?

So sorry if I'm asking dumb questions on this.

jimr
Posts: 498
Joined: Thu Feb 28, 2008 6:48 pm

Re: How to enter spouse 401k account info?

Post by jimr » Wed Apr 10, 2019 9:28 pm

Yeah, this was a shortcut I took when I first coded up the simulation logic and it turns out it'd be pretty complicated to unwind.

Currently, the planner just models one portfolio each for tax deferred and tax free savings and it's not possible to separately track individual account balances for multiple spouses. This was done to reduce the model's complexity.

While this shortcut does make it more confusing to enter cash flow information for each spouse, it shouldn't impact the planner's fidelity by very much (if at all).

The trick is to base the current age, retirement age, and all the additional inputs entries off the age of the oldest spouse, even when a cash flow belongs to the younger spouse. You can use the comment field to document exactly what the cash flow is for to help avoid some of the confusion this might cause.

The truth is, I'm less bothered by the work it'd take to re-write the sim logic than I am by the risk of introducing bugs. The inner sim logic is some pretty complicated code and it has been field tested by millions of users over the course of more than a decade.

mjonis
Posts: 7
Joined: Wed Apr 10, 2019 7:07 pm

Re: How to enter spouse 401k account info?

Post by mjonis » Wed Apr 10, 2019 10:04 pm

Thanks for the assist.

Pardon me while I write out a long post here, but just wanted to make sure I'm doing things correctly and then maybe I could help write up a "how do I" with examples, (and even screenshots) so maybe it'll help others out?

OK, so:

1) On Summary View tab, enter the current age, retirement age of older spouse.

2) Assuming #1 is correct, then for Portfolio values and Savings values, enter the LARGER of the two spouses information? (I don't see anywhere else to enter annual savings or portfolio values)

3) Run the simulation and then what do you do if it comes up "short" (ie: 70% probability)?


I'm thinking that rather (given my little understanding) --since the program kinda sounds like it was built on the premise of one person, or both couples being identical in age, portfolio, etc.---that it maybe should be:

1) Enter Current Age, Retirement Age of older spouse
2) Enter combined Portfolio Values and Combined Savings
3) Enter separate (additional inputs) of pension of younger spouse (if applicable --which in my case, it is)
4) Enter desired annual retirement spending for both spouses?

and that'll be a "better" estimate? Granted, it's still going to be "short" on the portfolio value/savings of one of the spouses (me), but if the probability of success is 100% (pulling a number out of my butt), then it would work?

Basically if you're wondering *why* I'm wanting/needing this:

If I input my data in all by itself I've got 100% chance. Obviously my spouse is older and has a lot less savings (well their portfolio is double mine, but I put in 15% and they only put in 7% and I'm the one with the pension as well, plus my incoming is 2.25x their income).

jimr
Posts: 498
Joined: Thu Feb 28, 2008 6:48 pm

Re: How to enter spouse 401k account info?

Post by jimr » Thu Apr 11, 2019 6:42 am

mjonis wrote:
Wed Apr 10, 2019 10:04 pm
1) On Summary View tab, enter the current age, retirement age of older spouse.

2) Assuming #1 is correct, then for Portfolio values and Savings values, enter the LARGER of the two spouses information? (I don't see anywhere else to enter annual savings or portfolio values)
For portfolio values, enter the combined total for both spouses. For annual savings, it's probably better to leave these fields blank on the main input window and enter the values for each spouse separately in additional inputs using the "taxable savings", "tax deferred savings" and "tax free savings" cash flow types (use the memo field to show which spouse each one belongs to).
3) Run the simulation and then what do you do if it comes up "short" (ie: 70% probability)?
If the probability comes up short, this generally means that the annual spending is too high given all the other assumptions in the plan (eg amount of annual savings, retirement age, etc). So in that case, you'd want to explore adjusting those inputs to see if there's a way to get the plan to have a higher chance of success.
I'm thinking that rather (given my little understanding) --since the program kinda sounds like it was built on the premise of one person, or both couples being identical in age, portfolio, etc.---that it maybe should be:

1) Enter Current Age, Retirement Age of older spouse
2) Enter combined Portfolio Values and Combined Savings
3) Enter separate (additional inputs) of pension of younger spouse (if applicable --which in my case, it is)
4) Enter desired annual retirement spending for both spouses?
I'd suggest something more like this...
1) as is
2) Enter combined portfolio values
3) enter separate addition inputs cash flows for pensions (of either spouse), social security (if applicable), and annual savings
4) enter desired annual retirement spending. This can be done either on the main window or in additional inputs. Entering this in additional inputs can be helpful when the spouses are retiring at different ages or when retirement spending is intended to be uneven from year to year.
and that'll be a "better" estimate? Granted, it's still going to be "short" on the portfolio value/savings of one of the spouses (me), but if the probability of success is 100% (pulling a number out of my butt), then it would work?

Basically if you're wondering *why* I'm wanting/needing this:

If I input my data in all by itself I've got 100% chance. Obviously my spouse is older and has a lot less savings (well their portfolio is double mine, but I put in 15% and they only put in 7% and I'm the one with the pension as well, plus my incoming is 2.25x their income).
This makes me think it'd be best to enter all of you plan's cash flows in additional inputs and just enter the combined current portfolio values on the input main window. When you create the additional inputs entries for each of the cash flows in your plan (eg savings, pensions, spending, etc) it may be helpful to enter a memo to say what the cash flow is (eg which spouse, etc). Keep in mind that even if the cash flow belongs to the younger spouse (pension), the start and end ages that you enter should be based off the age of the older spouse. Also, with this approach you'd want to leave the annual savings fields blank on the main input window as well as the annual retirement income and annual retirement spending fields.

mjonis
Posts: 7
Joined: Wed Apr 10, 2019 7:07 pm

Re: How to enter spouse 401k account info?

Post by mjonis » Thu Apr 11, 2019 10:36 am

Thanks Jim!

I think with your explanations now it helps me to understand things better.

And, since it's based on age of the person on the summary tab, (older spouse as 51, retire at 65) I'd enter the spouse's info into the additional inputs for tax deferred savings as:
Start Year: 51
End Year: 65

But for mine (I'm 5 years younger), I'd enter:
46 and 65 (assuming I wish to retire at 65 and spouse will be 70)--I subtract 5 years?
for tax deferred savings?

Or is it the other way around (I add 5 years?) LOL!

jimr
Posts: 498
Joined: Thu Feb 28, 2008 6:48 pm

Re: How to enter spouse 401k account info?

Post by jimr » Thu Apr 11, 2019 12:35 pm

I think it'd be the other way around. Everything should be based on your spouse's age for each cashflow start or stop.

So your savings cash flow starts now (spouse is 51) and ends when you're 65 (spouse is 70) - so use start age 51, end age 70 (for your savings)
Spouses savings cash flow starts now (spouse is 51) and ends when spouse retires at age 65 - so use start age 51, end age 65 (for spouse savings)

Your pension starts when you retire at age 65 (spouse is 70), so use start age 70, end age - end of plan

One things to think about is what retirement expenses will be when one of you is still working. When your spouse retires at age 65, will they need to make withdrawals from savings during the 5 years before you retire, and how much? It might make sense to break retirement expenses into two chunks in additional inputs. The first expense entry would be for when you are still working (starts when spouse is 65, ends when spouse is 69). The second expense entry (presumably higher) would start when you retire at 65. For that one, start age is 70, end is end of plan.

Finaly, since you're 5 years younger than spouse, it might make sense to set the plan end age to 100 instead of 95, so it'll calculate the plan out until you reach 95 (spouse would be 100).

mjonis
Posts: 7
Joined: Wed Apr 10, 2019 7:07 pm

Re: How to enter spouse 401k account info?

Post by mjonis » Sun Apr 14, 2019 11:49 am

Thank you so much!

I had to look at the detailed output to see it was the "other way around".

I'm finally getting the hang of this! LOL

Thanks for the advice on the split retirement and savings withdrawls.

I'll be purchasing a license, as I find this very useful. There's not many Monte Carlo simulators that are free, or low-cost, IMO, that:
a) deal with Pensions
and
b) deal with married couples

Granted, the married couples,could be handled a little more elegantly, IMO, but now that I understand how to input things, it works. Maybe I'll try to type up a Word doc with pictures on a "how do I" scenario so it's more obvious to others, LOL!

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