flexibleRetirementPlanner is a real gem! (and it is free)
I came across Jim Richmond’s flexibleRetirementPlanner by surfing the web for a good retirement planner with Monte Carlo capability and lots of flexibility to specify investment returns, taxes and cash flows. When I found this planner, its capabilities blew me away. It is the most capable non-commercial planner that I stumbled on so far and it’s easy to use!
My confidence in the planner’s results has been increasing, as I ran more and more pre and post retirement scenarios. While obviously, I can’t guarantee its accuracy, but I feel good enough about it to recommend it for you to explore its capabilities and to run your retirement scenarios. It has not been misnamed; its flexibility is impressive.
In addition to the usual inputs of: current and planned retirement age, inflation and tax rate, various flavors of assets and savings, it gives you the ability to explore the impact of various return averages and standard deviations, including variations of these parameters over time. It also gives you the flexibility to specify future cash-flows starting and ending at arbitrary dates, with or without inflation adjustment. To top it all off, you can chose three options of withdrawal strategies (most planners just assume that you’ll stay on autopilot and keep increasing your withdrawals with inflation irrespective of portfolio performance).
After running a Monte Carlo simulation with 10,000 samples, the planner’s output provides you with your “probability of success” and an annual view of your ‘median portfolio balance’ (including a graphical view) and ‘median withdrawal’ amount in current (inflation adjusted) dollars.
Using this planner you’ll get a feel for the sensitivity of outcomes to different (and more realistic): withdrawal strategies, returns (adjustable throughout the life-cycle), cash-flows (SS/CPP, pensions and annuities) and inflation (average and standard deviation).
This is a must try tool if you are exploring retirement planning scenarios. But do keep in mind the great mathematician Richard Hamming’s admonition that “The purpose of computing is insight, not numbers.”