Retirement planning
152 views
Skip to first unread message
Martin Blais
Sep 4, 2024, 1:46:15 PM9/4/24
to Beancount
[This is a bit adjacent in topic to Beancount - skip if not interested in forward projections.]
Today I saw what I thought was a pretty interesting retirement planning app on this video:
If you scroll forward you'll see a demo of a multi-page app with a number of pages and a lot of customizations.
The purpose of the app / website is to make an as detailed as possible forward plan and simulation of future expenses during retirement.
(I wonder if it's developed in-house or white-labeled across multiple other CFPs.)
In a sense, a much more sophisticated and personalizable version of this simple projection:
I don't think it would be very hard to come up with a version of this in a single spreadsheet, especially for a single scenario / individual.
(I thought this would be interesting to some here.)
If you have interesting links on retirement planning feel free to continue on this thread.
Justus Pendleton
Sep 5, 2024, 12:49:45 AM9/5/24
to Beancount
TPAW Planner[1] has a pretty good philosophy and Ben Mathew is very responsive to feedback and questions about "why does it do this" on the Bogleheads forum[2].
From the designer's description:
Following the lifecycle model, TPAW combines a "total portfolio" perspective with amortization based withdrawal (ABW) to arrive at a strategy with attractive risk/return characteristics.
The "total portfolio" refers to the fact that the present value of future savings and retirement income is counted as bonds in the portfolio. As indicated by the lifecycle model, a fixed asset allocation is maintained on this total portfolio. This translates to a downward sloping glidepath on the savings portfolio during working years. Retirement withdrawals are calculated by amortizing the total portfolio across retirement years.
The advantage of this approach is that total risk is kept consistent from year to year. This more even spreading of risk across time reduces the total risk that the retiree would need to take to achieve a given expected return (due to time diversification).
To calculate withdrawals, TPAW amortizes the portfolio as indicated by the lifecycle model. This is a variable withdrawal method that adjusts to portfolio performance, so there is no risk of running out of money before the end of retirement. The risk instead is that spending drops too low during retirement. This can be addressed by reducing portfolio risk (choosing a safer asset allocation) and/or increasing precautionary savings (reducing spending in early retirement).
Reply all
Reply to author
Forward
0 new messages