That said I started playing with the Goal-Seek parameters. Can anyone offer an explanation of what the minimal return represents? I assume average and STD? Also is it affected by the returns at the return boxes?
Thanks for any help
Depending on the settings in your exact plan, goal-seek may not be able to converge on an answer in the limited number of simulation runs that are done. If this happens, you'll notice that the probability of success output will not equal the Target probability of success that you configured in settings.
Even though the goal-seek option ignores the return/std deviation that you configure on the main page, any return/std deviation override settings that you configure in the top of the additional inputs window are still used.
All that said, I find that I use goal seek less and less now that the planner includes the sensitivity analysis feature. Goal seek was introduced a few years before sensitivity analysis. Most of the things you can do with goal seek can also be done using sensitivity analysis and sensitivity analysis does a better job with the visualization of the the range of possible results (imho).
I hope that makes sense, please don't hesitate to post a follow up if it didn't or if you have other questions.
Thanks for any insight Bill
We usually want to build a retirement plan with a very high probability of success to be comfortable. The downside is that doing so makes it likely that we'll spend less than we could have and leave a lot of money on the table. A plan that has a 90% probability of success means that 40% of the time you'll die with a lot of extra money in your portfolio that you could have enjoyed, but didn't. When using an annuity, you don't need to build in that extra cushion, because its designed to last exactly as long as you do.
If you haven't checked out the site bogleheads.org, you might want to have a look. It's a great community of diy investors, with a few famous bestselling financial planning authors mixed in. Their primary focus is low-cost investing a la Jack Bogle of Vanguard fame, but they also spend lots of time discussing exactly this sort of stuff and helping each other understand better.
There is one thing I cannot work through, and that is how to determine what a starting portfolio balance would need to be, given planned spend etc over the years.
I can see that there is an option to do this via the goal seek function, but when I use this and then look at the detailed tab, the "Additional Withdrawal with taxes" is the same value as "Expenses to fund". This column is correctly adjusted when running the scenario normally so I am wondering if I am doing this correctly, or misinterpreting the results.
That may be expected in some scenarios, but I'm assuming that's not what you expect. So using some made up numbers, could you give an example of what the columns show normally and then what they show with goal seek enabled?
Another option is to send an example frp file by email to firstname.lastname@example.org.
If you send a file, please realize that email is fundamentally insecure and not private, so you'll want to remove any personally identifiable information from the file and either send the file from an anonymous email account or change around the numbers in the scenario so no personal financial information is disclosed.
Here is an example of what I am talking about.
With a standard run, i.e. just run the simulator with my various settings I get the following columns filled on the "show more detail" tab from the main screen (these are made up numbers):
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Expenses to Fund RMD Used for After Tax Additional Taxes on Add'l Expenses Income Withdrawal Withdrawal Withdrawal with Taxes 1234 0 0 1234 55 1289
Code: Select all
Expenses to Fund RMD Used for After Tax Additional Taxes on Add'l Expenses Income Withdrawal Withdrawal Withdrawal with Taxes 1234 0 0 1234 0 1234
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