Tools to plan for retirement?

kinger101

BritishInvestor said:

kinger101 said:

cobson said:

Stubod said:

The only problem with this is that if you work on "safe" / worst case  numbers, (eg I use 4% inflation and 1% interest / growth on all savings and investments), then potentially you are not spending enough money! 

Your other problem is that spreadsheets hide sequence of return risk - even using 'safe' return rates doesn't make you immune to this.  Thats why the specialist tools use techniques like Monte Carlo analysis to try and gauge the risk.

It is possible to run Monte Carlo analysis in Excel.

It's possible to do lots of things in Excel but I'm not sure that it would be the optimal choice nor what you would gain from the exercise.

I never claimed it was optimal, just that it was possible. 

What you'd gain is having returns drawn at random based on historic mean and standard deviation which would demonstrate sequence of returns risk.  

BritishInvestor

kinger101 said:

BritishInvestor said:

kinger101 said:

cobson said:

Stubod said:

The only problem with this is that if you work on "safe" / worst case  numbers, (eg I use 4% inflation and 1% interest / growth on all savings and investments), then potentially you are not spending enough money! 

Your other problem is that spreadsheets hide sequence of return risk - even using 'safe' return rates doesn't make you immune to this.  Thats why the specialist tools use techniques like Monte Carlo analysis to try and gauge the risk.

It is possible to run Monte Carlo analysis in Excel.

It's possible to do lots of things in Excel but I'm not sure that it would be the optimal choice nor what you would gain from the exercise.

I never claimed it was optimal, just that it was possible. 

What you'd gain is having returns drawn at random based on historic mean and standard deviation which would demonstrate sequence of returns risk.  

That would assume someone was able to code the MC model in Excel correctly, entered reasonable input parameters (easier said than done) and interpreted the results correctly. I think for 99% of people using Excel, modelling an XX% dip in early retirement (as some on here already do) is going to be the better option.

Notepad_Phil

BritishInvestor said:

kinger101 said:

BritishInvestor said:

kinger101 said:

cobson said:

Stubod said:

The only problem with this is that if you work on "safe" / worst case  numbers, (eg I use 4% inflation and 1% interest / growth on all savings and investments), then potentially you are not spending enough money! 

Your other problem is that spreadsheets hide sequence of return risk - even using 'safe' return rates doesn't make you immune to this.  Thats why the specialist tools use techniques like Monte Carlo analysis to try and gauge the risk.

It is possible to run Monte Carlo analysis in Excel.

It's possible to do lots of things in Excel but I'm not sure that it would be the optimal choice nor what you would gain from the exercise.

I never claimed it was optimal, just that it was possible. 

What you'd gain is having returns drawn at random based on historic mean and standard deviation which would demonstrate sequence of returns risk.  

That would assume someone was able to code the MC model in Excel correctly, entered reasonable input parameters (easier said than done) and interpreted the results correctly. I think for 99% of people using Excel, modelling an XX% dip in early retirement (as some on here already do) is going to be the better option.

Before early-retiring I ran an excel model through an immediate market drop of 50% followed by only inflationary gains for the rest of our lives - I figured if we could live off the income from that then we'd be pretty safe.

Stubod

As per the above, I find some of the planners a little too complex to understand so I also use the facility to just reduce the starting value by "X" percentage in the first year.

In theory our one works pension and 2 state pensions that are index linked should be sufficient to maintain a reasonable level of spending and anything else on top is a bonus...

cfw1994

Law_man said:

Dandytf said:

OP
I uses EPA's ILife Saving+Spending Tool,
Which allows me to view effect of frozen DB and Active DC schemes.

Do you have a link to this? Sounds interesting.
I tend to use Excel. Perhaps we should all look at sharing a vanilla spreadsheet of our workings and work together to create a super dooper version.

Also never heard of "EPA's ILife Saving+Spending Tool", & google doesn't show me anything.

I've shared mine probably a dozen times with people.   I don't think there is one "super dooper" answer, unfortunately - depends where you are with accumulation v decummulation, I suspect....as well as how handy you are with spreadsheets.
If you want to see a generic version of mine, just message me.....but send me yours first    
My personal one is now somewhat more complex as I try to figure out how to include what pots the decummulation phase come from, but the layout is the same!

kinger101

BritishInvestor said:

kinger101 said:

BritishInvestor said:

kinger101 said:

cobson said:

Stubod said:

The only problem with this is that if you work on "safe" / worst case  numbers, (eg I use 4% inflation and 1% interest / growth on all savings and investments), then potentially you are not spending enough money! 

Your other problem is that spreadsheets hide sequence of return risk - even using 'safe' return rates doesn't make you immune to this.  Thats why the specialist tools use techniques like Monte Carlo analysis to try and gauge the risk.

It is possible to run Monte Carlo analysis in Excel.

It's possible to do lots of things in Excel but I'm not sure that it would be the optimal choice nor what you would gain from the exercise.

I never claimed it was optimal, just that it was possible. 

What you'd gain is having returns drawn at random based on historic mean and standard deviation which would demonstrate sequence of returns risk.  

That would assume someone was able to code the MC model in Excel correctly, entered reasonable input parameters (easier said than done) and interpreted the results correctly. I think for 99% of people using Excel, modelling an XX% dip in early retirement (as some on here already do) is going to be the better option.

Straw man.

westv

garmeg said:

cobson said:

Stubod said:

The only problem with this is that if you work on "safe" / worst case  numbers, (eg I use 4% inflation and 1% interest / growth on all savings and investments), then potentially you are not spending enough money! 

Your other problem is that spreadsheets hide sequence of return risk - even using 'safe' return rates doesn't make you immune to this.  Thats why the specialist tools use techniques like Monte Carlo analysis to try and gauge the risk.

You could always start the spreadsheet with a couple of -20% returns in years 1 and 2 and a small recovery afterwards. If the plan works in that scenario then it should pretty much past muster.

or perhaps a first decade with very low growth or negative growth.

RetSol

I have my own retirement planning app. AKA... my gut. Never this kind of thing... BritishInvestor said:

samshort said:

BritishInvestor said:

Stubod said:

..just a spreadsheet for me with each year on its own row, and columns for income and expenditure for each year, and the "pot remaining", then some cells that allow input of various inflation and interest levels that you can give it your best guess.

Or if you are inclined there is the firecalc website, but I find that a bit more complicated but at least you can plan based around actual historic stock market data...

Does firecalc have UK data?

I didn't think so. It's really hard to find UK data!

Yep, so maybe that could be a selling point.
You'd need
UK inflation
Global equities
Global bonds
UK equities
UK bonds
Global value
Global small
as a starting point.

And yet... I think it's going to work. 

[Deleted User]

Lars Kroijer has a YouTube series on building a excel spreadsheet using data tables for scenario outcomes

And one of his viewers created a copy in Google sheets per episode 
https://docs.google.com/spreadsheets/d/16O549Agt6RaSE-Eh5RZLGfZMZrmb55QhVu_33aH0RJw/edit#gid=607638753

AnotherJoe

Notepad_Phil said:

BritishInvestor said:

kinger101 said:

BritishInvestor said:

kinger101 said:

cobson said:

Stubod said:

The only problem with this is that if you work on "safe" / worst case  numbers, (eg I use 4% inflation and 1% interest / growth on all savings and investments), then potentially you are not spending enough money! 

Your other problem is that spreadsheets hide sequence of return risk - even using 'safe' return rates doesn't make you immune to this.  Thats why the specialist tools use techniques like Monte Carlo analysis to try and gauge the risk.

It is possible to run Monte Carlo analysis in Excel.

It's possible to do lots of things in Excel but I'm not sure that it would be the optimal choice nor what you would gain from the exercise.

I never claimed it was optimal, just that it was possible. 

What you'd gain is having returns drawn at random based on historic mean and standard deviation which would demonstrate sequence of returns risk.  

That would assume someone was able to code the MC model in Excel correctly, entered reasonable input parameters (easier said than done) and interpreted the results correctly. I think for 99% of people using Excel, modelling an XX% dip in early retirement (as some on here already do) is going to be the better option.

Before early-retiring I ran an excel model through an immediate market drop of 50% followed by only inflationary gains for the rest of our lives - I figured if we could live off the income from that then we'd be pretty safe.

Yep, KISS is definitely the thing here. No need for massively complex models unless you are on the edge of retiring , desperate to do so and willing to take the chance you wont get that big hit immediately (Or that if you do you can tighten your belt sufficiently)