Issue with the Sensitivity Analysis not functioning properly

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websight
Posts: 9
Joined: Sat Sep 21, 2013 1:20 pm

Issue with the Sensitivity Analysis not functioning properly

Post by websight »

I have version 4 for Mac and set up a scenario 1 which I then duplicated and titled a different name. When I deleted scenario 1, it removed all the data from my duplicated scenario. I didn't realize that would happen. Is that the case? Now I've set up the scenario again and tried to run the sensitivity analysis and it keeps returning a zero % success probability which wasn't the case when I first created the scenario 1. It the original set up, the scenario parameters resulted in 90% or better probabilities. Can anyone provide insight or better yet a fix? Thanks.

jimr
Posts: 601
Joined: Thu Feb 28, 2008 6:48 pm

Re: Issue with the Sensitivity Analysis not functioning prop

Post by jimr »

My guess is that the confusion has to do with how the sensitivity analysis feature relates to saved scenarios. Basically, sensitivity analysis runs along-side whichever scenario happens to be selected. The settings you choose in sensitivity analysis aren't saved per scenario, but instead are 'global'.

Hopefully this helps explain what you were seeing w.r.t. sensitivity analysis, but don't hesitate to post again for more clarification.

What you described about deleting scenario 1 removing data from the duplicated scenario doesn't sound right. When you say "removing data" I assume you're talking about settings rather than run results? Whenever you switch scenarios, the run results for the newly selected scenario are presented for easy comparison. If the newly selected scenario hasn't been run yet, you won't see any run results. Once you delete a scenario, you can't see its results unless you click on the 'Show all Runs' button, where you can review results from all past runs since the program was started.

Jim

websight
Posts: 9
Joined: Sat Sep 21, 2013 1:20 pm

Re: Issue with the Sensitivity Analysis not functioning prop

Post by websight »

I'm not sure I'm following you on the sensitivity analysis explanation. When I run results from the main page either in summary or detailed view I get a 100% success probability on scenario 1. When I try to run a sensitivity analysis on the same scenario (#1) I get zero % probability. And this is based on the same parameters and set up information I entered into the original scenario I created when I was seeing high probability results in the sensitivity analysis. Seems like something is missing in how the analysis is grabbing the data from the new scenario.

jimr
Posts: 601
Joined: Thu Feb 28, 2008 6:48 pm

Re: Issue with the Sensitivity Analysis not functioning prop

Post by jimr »

Do you mean that you get a 0% probability for every simulation run in sensitivity analysis (eg every cell in the heatmap graph)?

The probability that's shown in the right-hand panel in sensitivity analysis is connected to a simulation run from the heatmap with a specific set of sensitivity param values. Clicking on cells in the graph causes the right-hand panel to be updated to show the results for the selected cell.

Jim

websight
Posts: 9
Joined: Sat Sep 21, 2013 1:20 pm

Re: Issue with the Sensitivity Analysis not functioning prop

Post by websight »

I think I figured out the issue I was seeing with the sensitivity analysis. I was entering under "Additional Inputs" the specific living expenses and amounts I would be incurring. And then I was running a sensitivity analysis using the minimum and maximum expenses parameter and entering amounts under that parameter. Apparently you can't do both. Once I removed the amounts from the expense parameter, the analysis ran true.

Jim - thanks for your prompt replies and help. Much appreciated and great program!

websight
Posts: 9
Joined: Sat Sep 21, 2013 1:20 pm

Re: Issue with the Sensitivity Analysis not functioning prop

Post by websight »

Just a couple other questions regarding input:

If I enter "additional inputs" for income, it asks that I also enter the "taxable percent". What does this % represent, i.e., my income tax rate or the % of the amount that's taxable? If it's the latter (100% in this case) and I already entered my income tax % on the main page, the probability for success is very low which doesn't seem right. If I enter my income tax rate under the additional input amount, it seems more accurate. Confusing.

Where can I find more information on how to use the standard deviation features? I'd like to try some different scenarios, but I'm not all that familiar with standard deviation for inflation rate, etc.

Thanks again!

jimr
Posts: 601
Joined: Thu Feb 28, 2008 6:48 pm

Re: Issue with the Sensitivity Analysis not functioning prop

Post by jimr »

websight wrote:If I enter "additional inputs" for income, it asks that I also enter the "taxable percent". What does this % represent, i.e., my income tax rate or the % of the amount that's taxable?
It's asking for the "% of the amount that's taxable". The simulation will then multiply the amount times the percent you enter, times 1- the income tax rate to determine how much income is available for expenses each year.
If it's the latter (100% in this case) and I already entered my income tax % on the main page, the probability for success is very low which doesn't seem right. If I enter my income tax rate under the additional input amount, it seems more accurate. Confusing.
That doesn't sound right. It's true that you can override the income tax rate from the main page on a year by year basis using additional inputs, but if you don't enter any income tax rate entries in additional inputs, the amount from the main page should be used for all years. You may want to check the detailed year by year output to see what the simulation is actually doing with this income on a year by year basis (in aggregate at least). If you use the 'show more detail' you can see some more columns of data. Also, you can export the table to excel using right-mouse anywhere on the table in the standalone planner.
Where can I find more information on how to use the standard deviation features? I'd like to try some different scenarios, but I'm not all that familiar with standard deviation for inflation rate, etc.
On balance, using standard deviation for inflation isn't very helpful. In the end, it doesn't tell you anything you can't learn with other approaches (like sensitivity analysis). It just adds more complexity and potential for input errors and in truth I probably shouldn't have put that feature in there.
OTOH, standard deviation of returns is hugely important. One thing that can be interesting to play around with in sensitivity analysis is to use the separate 'return'/'std deviation' parameters (I think they're at the bottom of the sensitivity param dropdown lists).

Instead of using the canned return/std dev pairs in a single sensitivity parameter, separating out the return and std dev. as two separate params lets you explore the relationship between return and standard deviation more fully.

Jim

websight
Posts: 9
Joined: Sat Sep 21, 2013 1:20 pm

Re: Issue with the Sensitivity Analysis not functioning prop

Post by websight »

Great feedback Jim. Thanks. I now get it and have tried some of the standard deviation scenarios you suggested. One last thing. Because I'm trying to plan out for retirement for both my wife and I, my inputs are based on income and expenses for both of us. Is there anything special or additional I should be considering?

jimr
Posts: 601
Joined: Thu Feb 28, 2008 6:48 pm

Re: Issue with the Sensitivity Analysis not functioning prop

Post by jimr »

websight wrote:One last thing. Because I'm trying to plan out for retirement for both my wife and I, my inputs are based on income and expenses for both of us. Is there anything special or additional I should be considering?
Because there isn't explicit support in the program for multiple spouses of different ages, it's best to choose one spouse to base any age-based timing off of.

So for example if the older spouse is 40 and the younger spouse is 37 and both plan to start SS when they reach 67, you would create one additional inputs entry for SS that starts at age 67 and a second one that starts at age 70. The first entry is for the older spouse's SS and the second entry is for the younger spouse's SS, that starts when the older spouse turns 70.

Jim

websight
Posts: 9
Joined: Sat Sep 21, 2013 1:20 pm

Re: Issue with the Sensitivity Analysis not functioning prop

Post by websight »

Got it. Coincidentally, my wife and I have a 3 year age difference so your example was real life applicable. Thanks again Jim!

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