A few "pre-purchase" questions for those who have used it
Plan is to retire in next 3-6 months, so we're not in need of a "when or can I retire" calculator as much as a robust, comprehensive tool that will help us map out a plan that can be customized to take into account all the many "moving parts" of a comprehensive, optimized asset preservation, tax minimization and spending strategy, that can accommodate variables such and/or help provide data to answer questions such as:
- At this stage of life, does it still make sense to do TIRA to Roth conversions? (I get both yes and no answers using the simple, free calculators). And given spouse age difference (9 yrs), should we "stagger" when Roth conversions should happen so as not to bump up our taxable income too high?
- Can we factor in a set number of years (10) during which we will receive distributions from a deferred salary plan? (I have not found a free tool that allows this somewhat unique data to be included)
- Establish the optimal order or sequence (by account type) to draw from during retirement?
- Can we also factor in charitable contributions over time and the resulting tax impact?
I think the biggest challenge I'm facing is trying to choreograph all the moving parts of asset mgmt. (TIRA, Roth, 401k, brokerage accts., deferred compensation payouts) while also factoring in age differences and what that means in relations to claiming SS and accounting for RMD's. Its hard to know absent real analysis which levers to pull, when, and how far. I want a tool that is capable of tying everything together such that you can see how a change might impacts everything else - so you can better decide if it makes sense to pull the trigger or not.
So will Gold fulfill these needs? Is it more than I need (a sledgehammer to kill a fly?), Ideally, I'd like to configure it, establish an optimal plan, then revisit it once or twice a year and make any tweaks as needed to see if we are still one a good glidepath. Not something I want to continuously be messing with.
These are great questions and I hope Pralana users will add some responses but, as the developer of the tool, I'll lead off: Pralana Gold will do every one of the things you asked about. Further, it's fairly transparent so that you can usually see what it's doing. Regarding your question about whether it's more than you need, your needs are not plain vanilla items and you'll need a robust tool to meet your needs. Pralana Gold can handle them in stride but it's not serious overkill. With all that said, it doesn't take you by the hand and lead you through all the steps. You do have to think your way through it and it's supported by a 180-page user manual, so it does take a bit of a commitment to get it set up correctly. Finally, I'm available for consulting to help you through this and to ensure you're getting the most out of the tool.
Stuart Matthews, Developer of Pralana Gold
Thanks for the reply. Are you familiar with the Bogleheads "Retiree Portfolio Model?" I downloaded and looked at that hot mess of a spreadsheet. In my mind, its both overwhelming and assumes the user has more knowledge and data available (than most would likely have). How does PG compare?
Perhaps this will shed some light on your question reference PRC. Like you I had a not to distant retirement date set when I first used PRC and my concerns were more in line with yours, but perhaps not as many situations to model. I was more concerned with can I afford that vacation home, some overseas trips, gifting etc. That is how much can I spend and still be assured of adequate funds to age 95 (overly optimistic I am sure). I modeled different withdrawal rates and sequence, inflation, rates of return and Roth conversions using the different analysis methods provided. It takes time and thought to assure you understand your data entries and the results the program provides. I read the manual in total before even making an entry. It’s not a 30-minute endeavor and can be time consuming and for me the results affirmed what I had suspected, but wanted additional assurance. I played with the Boglehead’s Retirement Portfolio and thought its user interface/layout and documentation lacked considerably. I can’t speak to its results. You can get a good feel for the PRC program by reviewing the manual and just looking at examples on the PRC web page. The developer has answered every question I have asked and address any program issues in a timely manner. This is the best program I have found which actually modeled all of my retirement concerns. Hope you find this helpful.
Thanks both Stuart and Billy. Appreciate the feedback and guidance, and welcome any other comments as well!
How "impaired" will our projections be if we are in a very significant state of flux at present (i.e., we currently rent but plan to buy this year, but we also do not have a state or city selected yet). Additionally, our regular salary income is ending, and we will need to get private health insurance (but rate determined by state you live in - yet undetermined). Bottom line - do a number of "unknowns" like these diminish the power and value of the tool?
Also, I began reading the manual as Billy suggested (great suggestion!), but I'm wondering how far back into investment and tax records I'll have to go for inputs? Is it just 2020 or am I going to have drag out all my old returns and dive into them?
@nc-cpl I can vouch for PRC as an indispensable tool, whether you're planning retirement or managing retirement. It's really the Holy Grail, in my opinion, and I've tried/used many of them.
The great thing is that you *don't* have to dig back through years of stuff. You simply put in your starting balances for the year for your accounts, your asset allocation, etc and you're off to the races.
For you, what it can do is allow you to choose perhaps three different locations to move to, and model how much each one has on your bottom line and retirement projection. That's an invaluable tool in making that decision, to be able to easily model the state/local taxes, especially for retirees. Some states tax retirement distributions, some don't. Some are very favorable, some aren't.
You can model that home sale as well, have Pralana figure out your health care spending (get a simple Silver Plan baseline from the ACA site), as well as your Medicare expenses, and optimize your Social Security strategy and optimize Roth conversions and so much more.
It's an incredible set of capabilities, and not overly complex to use.
Financial Counselor/Retirement Planner
Money Coach Group, Inc
@nc-cpl, I finally took a look at the Boglehead's Retiree-Portfolio-Model. Clearly, it's a complex tool and, as its designers have cautioned, it will require a new user a good deal of time to become sufficiently familiar with it to become comfortable and get useful results from it. In terms of a comparison to PRC, I'd say that PRC is considerably more refined in virtually all areas and easier to warm up to, plus PRC has more capabilities such as Monte Carlo and historical analyses, automated optimizations (including Roth conversions), and supports multiple spending strategies including consumption smoothing, and doesn't have most of RPM's advertised limitations (after-tax contributions to tax-deferred accounts, early withdrawal penalties, multiple capital gains rates, correct calculation of taxes on withdrawal of unrealized capital gains).
Thanks everyone, I appreciate the comments and comparisons. I'm going with PRC Gold as it sounds like it has all the flexibility I'll need for anything unique that pops up. Are annual updates required to keep it working, or can I squeeze multiple years of use from it (on the assumption there are no big situational changes that require an update)?
and BTW - does it work with LibreOffice Calc? I sometimes find that macros don't work in LOC....