Pralana Gold integrates and analyzes all of your assumptions and inputs along with detailed tax calculations to create three complementary views into your future. This gives you the best possible insight on which to base important financial decisions.

Fixed-rate analysis results are presented both in graphical and in tabular form which enable you to see future projections in great detail.

Monte Carlo and Historical analysis results are presented in graphical form to show you the range and distribution of likely outcomes, with the fixed rate projection superimposed for comparison.

The blue bands indicate the distribution of Monte Carlo or historical analysis results in terms of percentiles. The red line is the corresponding fixed rate projection.

By leveraging the integration of your overall assumptions, accounts, portfolios, income and expenses along with detailed tax calculations, Pralana Gold can calculate optimum strategies that will enable you to maximize your lifetime savings.

Roth conversions

Gold can model and optimize the conversion of pre-tax and after-tax funds from your tax-deferred accounts to your Roth account and these conversions will be incorporated into its detailed income tax calculations.

Fixed-duration conversions

The first option available is to model Roth conversions over a user-specified number of years. In conjunction with this option, you can specify the starting year, whether it’s the husband or wife account being converted and what percentage of that account is to be converted. Both accounts can be done simultaneously, if desired.  

Gold will always prevent a Roth conversion from causing you to lose an otherwise-available ACA subsidy. So, if you’re eligible for the subsidy Gold will convert the maximum amount of money each year to take you up to but not over the ACA subsidy “cliff”.

Tax bracket restricted conversions

The second option available is to model Roth conversions by filling a specified marginal tax bracket to the upper limit. In conjunction with this option, you can specify the starting year, whether it’s the husband or wife account being converted and what percentage of that account is to be converted. Both accounts can be done simultaneously, if desired. Also, one could use this option while the other uses the fixed-duration option.

As with the fixed-duration option, Gold will always prevent a Roth conversion from causing you to lose an otherwise-available ACA subsidy. So, if you’re eligible for the subsidy Gold will convert the maximum amount of money each year to take you up to but not over the ACA subsidy “cliff”. Otherwise, it will convert the maximum amount possible each year without driving taxable income into the next-higher tax bracket.

Optimized conversions

The third option available is to do an optimized Roth conversion in which no user inputs are provided. In this option, the tool will use your planned retirement year as the starting year, consider both husband and wife accounts and determine the percentage of the accounts to convert and the marginal tax bracket that results in maximum lifetime savings. As with the other options, optimized Roth conversions will never cause loss of an ACA subsidy. If there are no Roth conversion planning parameters that yield better lifetime savings than doing no Roth conversions, the tool will tell you that. Otherwise, it’ll show you the best parameters and then it’s up to you to decide whether to incorporate them into your plan.

withdrawal order

Gold can model and optimize withdrawal order over pre-retirement, early retirement and late retirement periods to achieve the highest final savings balance.

Withdrawal order modeling

When you have a negative cash flow, you have to tap your savings to cover the deficit. Pralana Gold models this process and it also allows you to decide in which order to place your taxable, tax-deferred and Roth accounts for the withdrawals to cover those deficits. Further, it allows you make different selections for three different time periods, such as pre-retirement, early retirement and late retirement. Your choices tend to make a long-term difference in your overall savings because the taxation of the withdrawals is different for the various account types.

Optimized withdrawal order

Pralana Gold 2021 contains an algorithm that will calculate the optimum withdrawal order for each of the three time periods to achieve maximum lifetime savings across all of your accounts.  You then have the option of using that order or one of your own choice.

key start ages

Gold’s optimization algorithm will calculate the date on which both you and your spouse can retire with a 90% confidence level that your money will outlast you. Further, it will calculate the optimum ages for you and your spouse to begin taking Social Security benefits in the context of your overall plan. 

Earliest retirement dates

Pralana Gold gives you the capability to start and stop virtually all of your income streams on your retirement date. If you use this capability and make this association, Gold can then run a Monte Carlo simulation to determine the earliest such retirement date that will give you a 90% chance of not running out of money in your lifetime.  

Social Security start ages

Pralana Gold has the capability to calculate both your and your spouse’s Social Security benefits based on your planned start age(s), including spousal benefits.  Leveraging this capability, Gold can also conduct an analysis to tell you husband and wife start ages that will result in maximum lifetime savings.  Unlike calculators that simply tell you the age that results in maximum lifetime benefits, Pralana Gold calculates a solution that takes everything into account, not just earnings but taxes, growth on savings and so on.

Going even further, Pralana Gold enables you to investigate variable spending strategies, incorporate consumption smoothing and perform a bear market analysis. 

Variable spending strategies

Gold enables you to investigate several variable discretionary spending strategies while maintaining your non-discretionary spending as you’ve specified.  

Optional spending strategies

If you want to explore variable spending strategies for your retirement years instead of explicitly defining your expenses, Pralana Gold gives you that option! In this case, it differentiates discretionary from non-discretionary expenses. In the latter category are expenses related to property, children, healthcare and life insurance, and these are always used as specified on the related expense input pages.  Discretionary expenses, on the other hand, can be collectively replaced using any of several optional variable spending strategies that tend to make your discretionary spending a function of the size and performance of your portfolio.

Several different options

Here’s the list of variable spending strategies supported by Pralana Gold: fixed % spending (where, for example, you could mimic Bengen’s 4% rule), fixed % spending with floor and ceiling, constant spending, Guyton-Klinger rules, target % adjustment and an actuarial method.

consumption smoothing

Gold’s consumption smoothing algorithm provides valuable insights about your plan! First, it can help you maximize your standard of living over the remainder of your life. Second, it can quantify the amount of margin in your plan.

What is consumption smoothing?

Consumption smoothing is a term used by economists to describe a consistent standard of living for an individual regardless of family size and the ebb and flow of non-discretionary expenses.  In other words, it enables you to maintain the same level of discretionary spending (i.e., consumption) while you’re raising a family, paying your mortgage, paying for college educations, when you become empty nesters and when you’re retired. 

Fixed rate algorithm

Gold’s consumption smoothing algorithm is fully integrated with its other algorithms that combine your assumptions, current portfolios, income and expenses to generate future projections.  So, in the context of all your other inputs, it will compute the ADDITIONAL ANNUAL SPENDING that your plan can support.  You may view this as the amount by which you can raise your standard of living.  You could also view it as a measure of the amount of spending MARGIN in your current plan.

Statistical algorithm

As you ponder the notion of raising your standard of living, you should be keenly aware of the risk in the values produced by any consumption smoothing algorithm since they’re generally designed to spend all of your money by the end of your life. Values produced by a fixed rate projection method could have a 50% probability of error. Consequently, one school of thought is to project a life expectancy of 100 years to lower the risk associated with the consumption smoothing result. In contrast, Pralana Gold contains a more sophisticated algorithm that utilizes Monte Carlo and historical simulations in conjunction with consumption smoothing to calculate a standard of living with a 90% probability that your money will outlast you.

bear market analysis

Gold’s bear market analysis uses the asset classes and allocations and the income and expense details you’ve already established, but lets you load the sequence of returns associated with any of three historic bear market histories (1929, 1973 and 2000) and see the long-term effect on your portfolio!

Will my portfolio weather a bear market?

We’ve been experiencing a bull market for more than a decade now, but it won’t last forever.  In fact, many are predicting that the coming bear market may be deep and long.  How will your portfolio weather that storm?  

Pralana Gold contains an analysis feature that allows you to explore that very question!

How is this different from Pralana’s other analyses?

Gold’s Bear Market Analysis generates a single sequence of market returns for each of your asset classes, applies that to your selected scenario and graphically shows you how the long-term projection differs from your baseline projection.  And you have full control over that single sequence of returns.  You can select one of three canned historic sequences, such as that following the start of the Great Depression in 1929, or you can design your own custom sequence. This is sure to be an enlightening look at the robustness of your plan!