General Questions...

[irafues]

1) Are the annual savings increased each year for inflation?

2) Is the "goal seek withdrawal" output A) in today's dollars? B) before taxes on tax deferred portfolios?

3) Where did you get your avg return and stdv numbers? EDIT: Found the answer

Thanks for the great tool. I am excited to learn more about it.

[jimr]

1) Are the annual savings increased each year for inflation?

Yes they are.

2) Is the "goal seek withdrawal" output
A) in today's dollars?

Yes, the goal seek withdrawal amount is in today's dollars and is assumed to be adjusted for inflation throughout retirement

B) before taxes on tax deferred portfolios?

No, the goal-seek withdrawal amount is an after tax withdrawal amount.

The goal-seek algorithm repeatedly picks a withdrawal amount and runs the entire simulation (including deducting taxes on deferred withdrawals). Depending on the results, the withdrawal amount is adjusted either up or down and the simulation is re-run. this process is repeated until the planner hones in on the highest withdrawal amount that will result in an acceptable probability of success.

Jim

[irafues]

No, the goal-seek withdrawal amount is an after tax withdrawal amount.

The goal-seek algorithm repeatedly picks a withdrawal amount and runs the entire simulation (including deducting taxes on deferred withdrawals). Depending on the results, the withdrawal amount is adjusted either up or down and the simulation is re-run. this process is repeated until the planner hones in on the highest withdrawal amount that will result in an acceptable probability of success.

Jim

Thanks for the fast response Jim...

Still confused about the goal-seek withdrawal though. I run through a scenario and get a GSW of $27,394. When in Detailed View, "Planned Expenses" is exactly the amount of the GSW left after my tax rate assumption ($21915 assuming 20% tax rate). I also get "Taxes on Withdrawal" that is the correct amount of tax on my GSW. It seems to me that every column and detail points to the GSW being before taxes.

[jimr]

Actually, I stand corrected - The "withdrawal amount" IS the gross amount withdrawn from the portfolio, before taxes on deferred withdrawals are deducted. The net amount that's left to fund expenses is shown in the details tab as you indicated.

To tell the truth, this is sort of a bug. Well, less of a bug and more of a case of the implementation not matching my intent. I meant to report "planned expenses," which is the same as the withdrawal amount in the case of taxable or tax free.

However as I shoe-horned the feature in, I thought I could just change "initial withdrawal amount" to goal-seek withdrawal and it would be an easy swap as far as the GUI.

Thanks so much for persevering to get to the bottom of this.

Jim