@wallace471 Bob - Let me start by saying yours is a very interesting and informative analysis! Thanks for doing this. Three thoughts on what you've observed:
1 - I suspect PRC survey users answered the questions from a 20-30 year perspective since PRC is designed to project a full retirement timeframe, not just 10 yrs out. Some may configure it for just 10 yrs., but I think most go to end of life, so 20-30 yrs much more likely.
2 - Bias - One thing about PRC or most planning tools is you can construct as rosy an outcome as you wish by upping your inputs. Coming off ten years of above-average returns, I suspect some users responded with a bias towards a much more positive outcome than is realistic.
3 - I also suspect some users simply didn't think REAL ROR (or pay attention to the instructions to enter real ROR and not nominal) so some of the higher ROR responses may reflect nominal vs real, especially since most published reports express returns as nominal and not real.
Having said the above, it's revealing (in a somewhat troubling way) that even the most popular responses (by asset class) are outside the ranges Vanguard proposes, and some by a large margin. Begs the question as to how many users are vastly over or underestimating their results and consequently making life decisions based on erroneous projections.
I wonder, therefore, if the new web-based tool should incorporate warning popup messages if a number or percentage is entered that is way off from the norm. The user can still enter whatever they want but it would prompt them to recheck as a safeguard.
Yes Bob thanks for doing this 🙂. My take away (as if that's counts for anything😌) is PRC Forum users are one smart group! I would believe them before Vanguard or any of the other "professionals". Remember, there is not such thing as a professional financial predictor. Forum users have just as big of brains and have access to all kinds of information on the web if they take the time to do their own research, so that they can come to their own valid conclusions. Gold star to Forum users 🤩. Incorporating warning popup messages may be a good idea, but how do you define the "norm". Predictions from investment houses, historical averages, Farmers Almanac... not sure myself. Not trying to be a wise a$$, just trying to be useful 😜. Thoughts from other lurking 🤓 Forum users??????? I know you're out there.
@pizzaman it would be like on some sites where if you enter a number that doesn't fall within a certain range (or is misformatted) it throws up a warning that says something like "the value entered isn't typical - please check and re-enter"
yes, someone would have to define what an acceptable range is for certain cells. It can be broad enough to let most rational entries pass, but its mostly to prevent someone from entering 23% as an equity ROR when they intended to enter 2.3%. A way to keep people within the guardrails or reality. Stuff like that.
You could also allow the user to disable data entry warnings up front
Yea that sounds good! Maybe also add an extra warning about Real vs Nominal %.
@pizzaman Agreed. Gives users a sense that someone's looking out for them as they formulate their plan. Some will like it, others may disable it. Their choice.
