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    Thread: I made an attempt at a better retirement calculator

    1. 01-31-2017 10:13 PM #1
      For anyone interested in this type of stuff, I've built a retirement calculator to help analyze your financial situation and provide a realistic assessment of your projected retirement fund.

      www.pocketchangr.com

      It's all open source (this is just a personal project built in my free time).

      The quick story is that I didn't like any of the retirement calculators available online because they often gave very simplistic answers. Some never considered taxes, others didn't capture a persons entire investment portfolio, and yet others operated without any realistic assumptions about the market. Asking for the user to plug a 7% growth rate and projecting their wealth based on that number doesn't tell the whole story.

      With that said, this is an evolving project, it needs more work, and I welcome all feedback. Some of the trends built into the model are proper inflation assumptions, wage inflation, tax bracket inflation, adjusted rates of return for a number of investment categories, and various trends on maximum contributions.

      The end result is relatively simple,

      Total Account Balance - Your total dollar amount at retirement, in today's dollars. Essentially, if you were to retire today, would this be enough to support your lifestyle?

      Effective Annual ROI - This is the actual yearly rate of return across all of your investments. You should be able to see why simply assuming a 7% average growth rate can be terribly misleading. Retirement is a lot less about the interest and much more about consistently putting money away.

      Rank - This is the most "fuzzy" feature on the site, but it's designed to show how well your ROI compares to other users in your peer group. The higher, the better. Important to note that it's entirely based on unverified data and compares ROI (and not the total amount saved).

      I'll just add that there are certainly better tools on the market, particularly if you purchase a professional product. But this is quick and free, so why not.

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      02-01-2017 03:28 PM #2
      Quote Originally Posted by buumer View Post
      For anyone interested in this type of stuff, I've built a retirement calculator to help analyze your financial situation and provide a realistic assessment of your projected retirement fund.

      www.pocketchangr.com

      It's all open source (this is just a personal project built in my free time).

      The quick story is that I didn't like any of the retirement calculators available online because they often gave very simplistic answers. Some never considered taxes, others didn't capture a persons entire investment portfolio, and yet others operated without any realistic assumptions about the market. Asking for the user to plug a 7% growth rate and projecting their wealth based on that number doesn't tell the whole story.

      With that said, this is an evolving project, it needs more work, and I welcome all feedback. Some of the trends built into the model are proper inflation assumptions, wage inflation, tax bracket inflation, adjusted rates of return for a number of investment categories, and various trends on maximum contributions.

      The end result is relatively simple,

      Total Account Balance - Your total dollar amount at retirement, in today's dollars. Essentially, if you were to retire today, would this be enough to support your lifestyle?

      Effective Annual ROI - This is the actual yearly rate of return across all of your investments. You should be able to see why simply assuming a 7% average growth rate can be terribly misleading. Retirement is a lot less about the interest and much more about consistently putting money away.

      Rank - This is the most "fuzzy" feature on the site, but it's designed to show how well your ROI compares to other users in your peer group. The higher, the better. Important to note that it's entirely based on unverified data and compares ROI (and not the total amount saved).

      I'll just add that there are certainly better tools on the market, particularly if you purchase a professional product. But this is quick and free, so why not.
      I went through the calculator and overall it is really good, a couple of things that were kind of confusing or things that I would personally like to see:
      - What does "tax benefit" mean? is this the tax deduction that I would get if I contributed to a non-Roth 401k/IRA?
      - Does the "Account Value" include my "contribution"?
      - I would like to be able to change my "Effective Annual ROI"

      Overall, great job. Keep up the good work.

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      02-01-2017 03:57 PM #3
      What investment allocation is it assuming? It seems kind of pessimistic.
      Ross-Tech HEX-USB+CAN Interface user. PM if you want help locally (NE Atlanta area).
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      02-01-2017 04:08 PM #4
      I would like to see a more diversified approach. A multi bucket strategy. A tiered payments structure of you will. So like a column with age and monthly amount received. This would be good for those with real estate rental income now and a projected amount of income at a certain age assuming more properties will be purchased that cash flow. This would also be for those who will receive a pension, life insurance, or social security only past a certain age on a monthly basis. Now you can see how long you need your lump sum 401k to last you until your monthly payments start kicking in to boost or replace your projected monthly income.

      Inscribed with just two thumbs...
      Last edited by filmshoot; 02-01-2017 at 05:27 PM.

    6. 02-01-2017 05:22 PM #5
      Quote Originally Posted by tyintegra View Post
      I went through the calculator and overall it is really good, a couple of things that were kind of confusing or things that I would personally like to see:
      - What does "tax benefit" mean? is this the tax deduction that I would get if I contributed to a non-Roth 401k/IRA?
      - Does the "Account Value" include my "contribution"?
      - I would like to be able to change my "Effective Annual ROI"

      Overall, great job. Keep up the good work.
      Appreciate the feedback! And to answer your points,

      -"Tax benefit" is the amount of taxes saved by investing in a tax-deductible account, namely HSA, 401k, or the Traditional IRA (so you are correct in your assumption, but I should label this better).

      -"Account value" represents the total value of your investments, and it does include your contribution. The interest along with any company matching would be represented by the differences in Account value and Contribution columns.

      -Curious about the last suggestion. Would you like to change the assumptions underlying some of the investment categories? The ROI itself will change as you re-allocate your money (assuming you're not at the optimal state). As an example, paying more towards a high interest loan will bump the ROI. In an earlier version I've included the option for the user to select the market conditions between Optimistic, Moderate, and Pessimistic, but have since removed that feature because most users simply left it at "Moderate". I can bring that back if anyone's interested.

    7. 02-01-2017 05:33 PM #6
      Quote Originally Posted by core5 View Post
      What investment allocation is it assuming? It seems kind of pessimistic.
      I actually have an older version of the calculator which is hosted on a different site where I've included a "How it works" section. It is slightly out of date with the new version (I'm working on creating a similar write-up to include with the new site), but it might help answer some of your questions in the meantime.

      foreseenfortune.com/howitworks

    8. 02-01-2017 05:42 PM #7
      Quote Originally Posted by filmshoot View Post
      I would like to see a more diversified approach. A multi bucket strategy. A tiered payments structure of you will. So like a column with age and monthly amount received. This would be good for those with real estate rental income now and a projected amount of income at a certain age assuming more properties will be purchased that cash flow. This would also be for those who will receive a pension, life insurance, or social security only past a certain age on a monthly basis. Now you can see how long you need your lump sum 401k to last you until your monthly payments start kicking in to boost or replace your projected monthly income.

      Inscribed with just two thumbs...
      I dig it. The prototype for the site is actually built with Excel which allows the user to do almost exactly what you've described. The challenge since has been to design something for a website that is easy for most folks to pick up and use. My goal is to add more user-defined customization (year by year or month by month), but it may take some time.

      Some of the other feedback has centered around including more of the post-retirement projections into the interface (just like you mention). Essentially helping the user determine what their retirement number represents or how long it will support their lifestyle.

    9. Senior Member dunhamjr's Avatar
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      02-03-2017 05:25 PM #8
      using chrome.
      it works ok but there are some obvious problems/omissions.

      limited to 401k only and only to the 18k limit. fine for many but not for me.
      we have a 401a and 457 as well. we have a 403b as well but dont put money there yet. no way to account for any of these. there needs to be a way to enter more pre-tax accounts/contributions.

      the IRA function doesnt seem to work, my account balance doesnt change if i change the IRA contribution amount from 0, to 5k, to 50k. if this is taking salary into account, fine... but still the Roth IRA should work.

      Roth button does allow for entry of Roth account info or contributions. the account balance calc seems to change with Roth checked... but it doesnt look like the function is really working.

      i guess i would also point out that 401k can be both pre and post tax, the tool doesnt seem to consider that.
      would be nice if you could set a $ amount for 401k company match. mine maxes at $4500, and i will max it... easier than calc'ing the percent for 75% of 6% base.

      are we supposed to include cash accounts in the 'open market accounts' value? it makes sense, but not obvious.

    10. 02-04-2017 10:11 PM #9
      Quote Originally Posted by dunhamjr View Post
      using chrome.
      it works ok but there are some obvious problems/omissions.

      limited to 401k only and only to the 18k limit. fine for many but not for me.
      we have a 401a and 457 as well. we have a 403b as well but dont put money there yet. no way to account for any of these. there needs to be a way to enter more pre-tax accounts/contributions.

      the IRA function doesnt seem to work, my account balance doesnt change if i change the IRA contribution amount from 0, to 5k, to 50k. if this is taking salary into account, fine... but still the Roth IRA should work.

      Roth button does allow for entry of Roth account info or contributions. the account balance calc seems to change with Roth checked... but it doesnt look like the function is really working.

      i guess i would also point out that 401k can be both pre and post tax, the tool doesnt seem to consider that.
      would be nice if you could set a $ amount for 401k company match. mine maxes at $4500, and i will max it... easier than calc'ing the percent for 75% of 6% base.

      are we supposed to include cash accounts in the 'open market accounts' value? it makes sense, but not obvious.
      You are correct, it does not have a number of retirement accounts (particularly those only available to government employees). You could cheat and enter those accounts under the 401k option, but it obviously is more complicated than that. I do appreciate the feedback though, as it helps me understand what should come next.

      The IRA account does have a salary cut off based on your characteristics (age and marital status). Your starting balance will be added to the total, but it will not allow additional contributions if your income is in excess of the cap. The Roth account has the same cap to contribution, unless we are talking backdoor contributions. Perhaps I'm not understanding, but are you contributing to either of these accounts after you hit the salary cap? Wouldn't it be more advantageous to invest into other options?

      I've tested a few scenarios with Roth and IRA contributions, and it seems to work OK, but I may be missing something. Is there a reason why you believe it isn't working?

      The feedback about creating a dollar amount for 401k company match is actually very helpful! Most of the inputs are based on my personal experience, and company match has typically been % for me.

      And lastly, the market account option is simulating the open market performance. It's a good representation for any index/ETF investments. I don't really have a cash option at this point, as I would expect these accounts to be relatively small. Did I understand that correctly (and you're referring to cash/checking accounts)? I would imagine that most folks have these capped at 10-20k.

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      02-05-2017 02:53 AM #10
      Quote Originally Posted by buumer View Post
      You are correct, it does not have a number of retirement accounts (particularly those only available to government employees). You could cheat and enter those accounts under the 401k option, but it obviously is more complicated than that. I do appreciate the feedback though, as it helps me understand what should come next.

      The IRA account does have a salary cut off based on your characteristics (age and marital status). Your starting balance will be added to the total, but it will not allow additional contributions if your income is in excess of the cap. The Roth account has the same cap to contribution, unless we are talking backdoor contributions. Perhaps I'm not understanding, but are you contributing to either of these accounts after you hit the salary cap? Wouldn't it be more advantageous to invest into other options?

      I've tested a few scenarios with Roth and IRA contributions, and it seems to work OK, but I may be missing something. Is there a reason why you believe it isn't working?

      The feedback about creating a dollar amount for 401k company match is actually very helpful! Most of the inputs are based on my personal experience, and company match has typically been % for me.

      And lastly, the market account option is simulating the open market performance. It's a good representation for any index/ETF investments. I don't really have a cash option at this point, as I would expect these accounts to be relatively small. Did I understand that correctly (and you're referring to cash/checking accounts)? I would imagine that most folks have these capped at 10-20k.
      yeah the retirement account thing isnt a problem for the balances i would be ok combining them on one line since they are all pretax, its the contribution limits that are causing me issues.
      i have a 401k available. my wife has a 401a, 457, and 403b. we are fortunate enough to be able to contribute a lot, maxing my 401k, her 401a, and starting on the 457... so capping the calculator at $18k in contributions is the issue, since currently we are contributing over twice that to pre-tax accounts.

      the IRA issue is maybe more about my understanding on how the page is meant to work. the page has two flags, Ira and Roth... Y/N. so how can i show my balance in each and my contributions to each? when i flip IRA to Yes, i get the opening balance and ira contribution. when i flip Roth to yes, the data entry doesnt change. for me, when i flip the Roth flag to Y, the only thing that changes in the screens are in the graph. we have both IRA's and Roth's. currently we can only contribute to the Roth's, so i have been converting some inherited stocks out of a brokerage account at LT cap gain rates and pushing that money into the Roths. the tool doesnt really allow me to show that we have both types of IRA's to consider.

      the 401k match thing is because of my own experience and some of the complexities that matches can come across as. my company has a stepped 401k match with a maximum at each level. my tenure allows a $4500 cap. but the 'match' methods that the company uses remain the same... 75% of 6% up to the cap for your time with the company. so say i make $100k. that means my match is $4500. but if I am only in year 1, then I am capped at $1500... not the full $4500 your calculator will allow.

      i am ok showing the cash in the brokerage, though that will skew the numbers because the gains on most cash accounts of very minimal vs being invested. and how much people have in cash will vary based on risk tolerance and financial situation. lots of people still have the whole 6-12 months expenses in emergency cash mentality. or they could be like me and have a rental, therefore needing to hold a bit more cash to account for lack of tenant rental income. or also like me currently, working on saving up a 6 figure cash account as a down payment on a new house. lots of reasons why people might end up with way more than $10-20k in cash...

    12. 02-07-2017 12:10 PM #11
      Quote Originally Posted by a_riot View Post
      I think I would keep it all on one page, so no "next" buttons. Plus you can look at everything all at once and make changes in real time to see how it changes the final results. Unfortunately with something like this it has to be highly detailed in order for it to be accurate, which turns many user's off, since they don't want to enter in all that information. But an inaccurate retirement calculator is worse than no calculator, so you don't really have a choice. Sites like personalcapital.com do this because they already have all the data, so its easy to use without entering in a ton of information. I think they also run various simulations while changing assumptions and take an average, so you can see the average, best case and worst case scenarios which is useful.
      You can cycle through the tabs by clicking the tab number on top in order to make the changes. Otherwise it becomes rather cumbersome (my first attempt had everything on a single page, but it was too confusing). You are correct in stating that I need to collect the data opposed to pulling it from an existing database. On my site, you also have the same set of high, average, and low projections by selecting the market question at the top, but you cycle through them individually. I'd like to combine all three into a single result pane, but I have to be very careful to avoid over-complicating the results.

      I fully acknowledge that my project needs some work (and even then, it wont be perfect for everyone). But sites like personalcapital are not as straightforward and often murky with their advice. Being open-source, the project allows for anyone to validate the code underneath to determine if it makes sense (as well as to make improvement down the line). There is no sign up and you can get an answer with a few minutes. There are more accurate products on the market, but I think there is a niche to be found in that middle ground. (It's also not really a for-profit venture, just something I enjoy doing)

    13. 02-07-2017 12:21 PM #12
      Quote Originally Posted by dunhamjr View Post
      yeah the retirement account thing isnt a problem for the balances i would be ok combining them on one line since they are all pretax, its the contribution limits that are causing me issues.
      i have a 401k available. my wife has a 401a, 457, and 403b. we are fortunate enough to be able to contribute a lot, maxing my 401k, her 401a, and starting on the 457... so capping the calculator at $18k in contributions is the issue, since currently we are contributing over twice that to pre-tax accounts.
      Gotcha, I'll break out the 401k and 403b into separate categories. Seems like it's a popular enough plan to warrant a separate category (without needing to change the 401k contribution caps).

      Quote Originally Posted by dunhamjr View Post
      the IRA issue is maybe more about my understanding on how the page is meant to work. the page has two flags, Ira and Roth... Y/N. so how can i show my balance in each and my contributions to each? when i flip IRA to Yes, i get the opening balance and ira contribution. when i flip Roth to yes, the data entry doesnt change. for me, when i flip the Roth flag to Y, the only thing that changes in the screens are in the graph. we have both IRA's and Roth's. currently we can only contribute to the Roth's, so i have been converting some inherited stocks out of a brokerage account at LT cap gain rates and pushing that money into the Roths. the tool doesnt really allow me to show that we have both types of IRA's to consider.
      You're correct, I only created a single IRA (with an option to chose between Roth or Traditional). My initial assumption was that it would be pretty rare to have both plans, but I was probably wrong on that one. I'll add a separate IRA category for Roth and Traditional.

      Quote Originally Posted by dunhamjr View Post
      the 401k match thing is because of my own experience and some of the complexities that matches can come across as. my company has a stepped 401k match with a maximum at each level. my tenure allows a $4500 cap. but the 'match' methods that the company uses remain the same... 75% of 6% up to the cap for your time with the company. so say i make $100k. that means my match is $4500. but if I am only in year 1, then I am capped at $1500... not the full $4500 your calculator will allow.
      This makes a lot of sense (and I appreciate the perspective here), I'll add this one to the list of changes.

      Quote Originally Posted by dunhamjr View Post
      i am ok showing the cash in the brokerage, though that will skew the numbers because the gains on most cash accounts of very minimal vs being invested. and how much people have in cash will vary based on risk tolerance and financial situation. lots of people still have the whole 6-12 months expenses in emergency cash mentality. or they could be like me and have a rental, therefore needing to hold a bit more cash to account for lack of tenant rental income. or also like me currently, working on saving up a 6 figure cash account as a down payment on a new house. lots of reasons why people might end up with way more than $10-20k in cash...
      That's true, but that cash will typically be used up over a relatively short time span. I'm thinking that anyone who has a large cash account will either use it for a down payment (as is your case) or other miscellaneous/emergency expenses. Its not something that you would drawing for living expenses upon retirement. I could obviously add a cash/money market account, but it would simply get decimated by inflation.

    14. Senior Member dunhamjr's Avatar
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      10-09-2017 04:30 PM #13
      seems like its been a while since the site was updated. or blog posted

      the site does have some of the changes we discussed and does seem to estimate out pretty close to my own numbers.

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