Goal Seek Question

[OrlandoMan]

- On the main input screen I set Up FRP with an ‘Annual Retirement Spending of $75,000 - Stable Spending Policy”
- When I ‘Run’ I get a 99% of Success – Average Spending Shortfall 13% & ‘X’ Mean Portfolio Ending Value
- I have additional income & expense items on the Additional Inputs page
- - - - - -
- I then activated ‘Use Goal Seek to find Maximum Annual Withdrawal Amount’ & 90% chance of success
- I Re-Run scenario
- It now shows 90% of Success – Average Spending Shortfall 12%
- It shows a Goal Seek withdrawal amount of $72,977 (13.5%)
- It shows the Mean Ending value of a just under 50% of the median ending portfolio value, when not activating Goal seek

I’m confused, I don’t understand why the chance of success & median portfolio value is less when activating ‘Use Goal Seek to find Maximum Annual Withdrawal Amount’? I was just expecting it to suggest a recommended annual spending amount.

Thanks!

[jimr]

I have to admit this one threw me for a loop. I was able to reproduce what you're seeing on my end and at first I thought you'd uncovered a bug in a feature that's been in the code base for over 15 years.

It's been so long since I've looked at that code that I had basically forgot what it was trying to do. But it turns out it's not a bug as much as a documentation problem (and me forgetting what the feature plainly says it's doing).

The key is that it's goal seeking on the starting portfolio withdrawal amount, not on retirement expenses. If there's no retirement income or other additional input expense entries in the first year of retirement, the initial withdrawal amount will be the same as the retirement spending amount. But if there's any retirement income starting in the first year of retirement (either on the main page or from additional inputs), or if there are any retirement expense entries in additional inputs that happen in the first year of retirement, the withdrawal amount and retirement expenses won't be the same.

You can see this more clearly by looking in the detailed view table. There you can see the year by year retirement spending amount (planned expenses column). This will show much much spending the goal-seek withdrawal amount will actually support.

I'm sure this all made sense to me when I coded it up, but it's obviously a bit confusing and I'll have to think about how to make this more obvious. At a minimum I need to update the documentation.

Anyhow, thanks for bringing this to my attention. If you send an email to info@flexibleRetirementPlanner.com I'd be happy to send you a free personal use license key for uncovering this confusing aspect of the planner and helping me to me to (hopefully) make it less confusing in the future.

Jim

[OrlandoMan]

Jim,

Thanks, for taking the time to look into the issue I brought up & giving a detailed explanation. I've been using your FRP for many years & just decided to try using the 'Goal Seek' function for the 1st time.

Yes, maybe a brief expansion of the documentation on the purposes of the Goal Seek options would help.

Thanks, for the great FRP product & your continuing support!