I just started using Pralana and use the Advanced Portfolio Modeling method and have a few questions. I apologize in advance if this has been asked but for the life of me I could not find it. I also read the user manual and see an example of multi yr asset allocation/etc but didn't answer my question. In any event here goes (my plan start year is 2026):
- Are these rate of return numbers used to calculate my variable spending $'s on the Expense Statement and if so, are the applied consistently each yr without any change vs when they are used randomly in the Monte Carlo calc?
- On the Rates of Return tab, if I only input %’s for each asset class for my based year (2026), do these carry forward every year consistently?
- How do I model for my expense spending a 2026 equity market downturn, short-term return changes between certian years, with the remaining years normal expected returns? Do I just input as an example: 2026 (-15%), 2027 (0%), 2030 (6%)? Will each yr will change and remain constant until the next yr changes? will 2029 and forward stay consistent at 6%?
Thanks in advance
@pgreenx You can specify up to 5 distinct time periods (under the Portfolio Time Periods tab), each of which can have its own rates of return and asset allocations/locations (depending on if you're using Mode 1 or 2). You specify the start year of each period, and its parameters hold until the start of the next period.
Thanks. Can you also confirm the variable spending $s shown on the Expense Statement are generated using the above returns based on whatever withdrawal strategy model I use (ie guyton)?
using just one year of return %s and mode 2, Im getting a static dollar amt in my variable spending dollars for every yr from start to death. I know they should change…
@pgreenx This is a great question and I had to go review the user manual to refresh myself on how GK works.
In summary, the GK variable spending amount is established at retirement. That initial amount is used annually, adjusted for inflation, unless either the "prosperity" or "capital preservations" rules are triggered, in which case there are adjustments.
Apparently, in your plan, these rules are not triggered.
Thus, you are seeing a static $ amount for variable spending (determined in the year of retirement) when you view the amount in Today's $. When viewed in Future $, it increases by your inflation rate annually.
For more information, there is a link to Wade Pfau's paper "Making Sense Out of Variable Spending Strategies for Retirees" by Wade Pfau on the variable spending strategies at More > Resources > General Resources.
Hope this is helpful,
Charlie
@cstone Thanks very much - I actually went back into excel and figured this out....
While I have your ear, I retired in 2019 but starting Pralana in 2026. Is there any "elegant" way to back fill to BOY2019 to get the "established at retirement" portfolio value?
Im guess not or have to do something like plugging 2019-2026 returns to arrive at my current value or ??? which doesn't make much sense even if possible
Thanks again
Q: "Is there any "elegant" way to back fill to BOY2019"
A: Not in Pralana
Q: "plugging 2019-2026 returns to arrive at my current value"
A:
If you mean your initial account balances, you can get those off your Dec 2025 bank/brokerage statements.
If you mean your account/asset class rates of return and you want to base them off of the rates of return over the last few years, you would need to do this in Excel or some other way to get the average/mean. Others on the forum may have suggestions for this.
