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Wow! Thank you so much for the fantastic and thoughtful feedback. This is truly excellent and super helpful. You're right that the needs of people at or near r

by gerad 4y ago

Wow! Thank you so much for the fantastic and thoughtful feedback. This is truly excellent and super helpful. You're right that the needs of people at or near retirement (especially early retirement) are much more complex and comprehensive than those that are further from it: people closer to retirement have more types of investments and income (pensions), tax optimizing your retirement drawdowns is super important, social security relevant (it's better for younger folks not to count on it). This is part of the reason that there's a lot more whitespace in the market there – there's a lot more to build! We're planning to get there one day, but it takes time. You're right we're targeting younger families right now. They still have plenty of questions, but their financial situations are generally much more uniform. We're big fans of the BogleHeads (it's why we use the 3 fund portfolio in our plan) and Mr. Money Mustache - they do a great job with general purpose advice, but we've found it hard to make actionable. These articles can't answer questions like how much later will I need to retire if I buy a bigger house? Or how much should I save in my 529? It's really impossible for most people to figure that out right now. Thanks for pointing out some inadequacies in our FAQ. This is super helpful, we'll get it up to date. I'll also try to respond to everything here. Please let me know if I missed anything. - Takes into account capital gains. But it didn't ask any basis information about my brokerage balance. Does it guess? What value did it use? We assume your cost basis is 100% for the initial balance with the manual inputs (if you don't sync your accounts via Plaid), and we track the cost basis and tax impacts of future buys and sales when running our simulations. - Takes into account income tax. It didn't ask my breakdown of stocks/bonds in the brokerage account or in my retirement accounts. How are dividends and interest handled? The simulation today essentially assumes that you follow our recommended stock/bond allocation, but we're working to open that up. We take income tax into account for traditional retirement fund distributions and capital gains. Dividends and interest payments are rolled into gains (admittedly this does understate their tax impact when the savings are in taxable accounts). - There is no way to separate traditional retirement accounts from Roth type accounts which have very different tax treatments. Yep, for the onboarding flow we keep things simple - we only ask for one "Retirement savings" number. But you can add a Roth account (and any other number of accounts) after onboarding. - Social Security needs to be modeled. The free open source tools at https://ssa.tools https://ssa.tools and https://opensocialsecurity.com https://opensocialsecurity.com contain the minimum that you need to model. The question "Should I work one more year?" is a common one and one you need to handle. Thanks the links! Super useful. We'll check them out. We don't model Social Security yet - it's tough to forecast how much younger folks should count on it, so we've left it out for now. - Health care is not even on the list of things ignored and it's one of the biggest questions for folks retiring early. It has huge effects on federal taxes and the ACA cliff caused some folks to keep their income artificially low. IRMAA [3] is also a concern for some folks. - A common question for early retirees is should I do a Roth conversion or should I take advantage of the 0% capital gains bracket? Modeling the RMDs and the taxes on that is complex, but absolutely necessary to properly answer this question. Completely agreed on both. Early retirees have a lot of really complex needs that we really can't help with (yet). - Ignoring state taxes can give misleading answers to some of the questions above. I live in a state that taxes capital gains as income, like many states. So when I take advantage of the 0% federal cap gains bracket, my state taxes can be 3-4x my federal taxes. Handling state taxes is on the roadmap. There are a lot of states! For most of our demographic, the impact is expected to be small on the percentage change change of outcomes.

fsflyer 4y ago
My first comment was based on the simplistic onboarding flow before being asked to login. I've poked around the site a little more and have additional comments. The site is for folks that are ok with a probability of success. There are folks that want better guarantees, probably annuities. Wade Pfau, who has been researching retirement planning for 15+ years has a good description of the issues in his Retirement Planning Guidebook [0] which talks about his RISA model. Looks like he's now productized it at [1]. I looked at the asset allocation recommended over time, and I think that should be adjustable based on the users level of risk. I like your guide concept, but the content feels pretty generic. I think any product in this space needs to have a big emphasis on educating the user about the issues. I would like to see this integrated into the calculator better. Maybe a report that lists the issues that the product handles, then customizes the list for this particular financial plan showing if and when in the plan the issue applies and gives further resources to learn about the issue. Order it by when, so the customer has a financial issue learning plan. In the education theme, the product is making lots of unstated assumptions now, and it makes it hard to interpret the output. As my teachers (and probably your teachers as well) said, ALWAYS state your assumptions. Another way you can make your product more usable is to figure out what the top questions your customers want to answer and then build guides to show them how your product answers that question. I see you've got a part time position open to figure out customer needs, this could make it easier to close a sale. It may be possible to go through the forums at various groups like Mr. Money Mustache, Bogleheads, etc to find common questions. Speaking of education, the algorithm needs to be well documented. Otherwise it could be based on a random number generator for all I know. Is it based on historical market data? Or is it Monte-Carlo based? If it's MC, then what data is generated and how? Is the data different on each run, or is it the same MC data used for every run for all folks (essentially treated the same as generated historical data.) Jim Otar has some good comments about MC in his book "Unveiling the Retirement Myth" [2]. He's not a fan of most Monte Carlo data generators, but gives a set of tests that any good MC generator should pass. He's a fan of using historical data. Karsten (a retired economist) at Early Retirement Now [3] has done quite a bit of work on Safe Withdrawal Rates using historical data above and beyond what Began has done. Have you used Financial Engines at all? It was around a dozen years or so ago much like what you are building that William Sharpe was involved in. They tried to partner with 401k providers to offer it as an upsell to large companies. I have an old 401k that still has it. They started as a tool for the DIY, but pivoted to managing your 401k for a percentage of assets. A recommendation for you is to make the initial onboarding a big more clear as to what type of account and whose account it is for those that are married. Getting quality data here will help for the features I am going to suggest. Some feature suggestions for you to think about that could be competitive differentiators: 1. Help estimate life insurance needs for folks. There are a number of approaches, income replacement and expense liability matching are a couple common ones. This is a feature that your competitors don't have and fits with the demographic you are targeting. There is a lot of opportunity for education in this area. There is the opportunity for referral income by referring folks that truly understand their insurance needs and are ready to buy. 2. Different forum communities have standardized formats for background data for asking questions. Make it easy to get your data in that format for asking a question. This would mean engaging more with those communities. 3. It looks like the plans go out to about 100 years old. Open Social Security uses five different mortality tables to estimate life expectancy or an entered age, which can tune a plan to meet someone's situation much better. 4. Forced early retirement. It's happened many times in the past and likely will again. 5. Divorce. This is a tough one, but it's fairly common these days, and throws a real monkey wrench in financial plans. The rules differ per state making it lots of work. Some have fairly clear rules that could be implemented, others are kinda up to the judge. Real World Divorce [4] may be usable as a survey to get a feel for the scope of the different rules. I'd like to object to your statements "social security relevant (it's better for younger folks not to count on it)" and "it's tough to forecast how much younger folks should count on it, so we've left it out for now" It's really easy to handle this. Look at how Open Social Security handles it. There is a year and a reduction percentage. He fills in defaults from the Social Security Trustee report, since they are required to estimate it based on current law. For younger folks the year probably doesn't matter, since it will happen before they withdraw, just the percentage matters. This is an opportunity to educate folks rather than perpetuate the fear that it won't be there for them. For many of them it will probably be their largest income source in retirement even after the reduction. I don't think the complexity of the questions that early retirees have like Roth conversion or 0% cap gains is any more complex than the buy a bigger house question. Look at the complexity of the NYTimes Buy vs Rent calculator [5]. I suspect the buy a bigger house is similarly complex when you really dig into it. Happy to answer any other questions you have. [0] https://www.amazon.com/Retirement-Planning-Guidebook-Navigating-Important/dp/194564009X https://www.amazon.com/Retirement-Planning-Guidebook-Navigat... [1] https://risaprofile.com/risa-how-it-works/ https://risaprofile.com/risa-how-it-works/ [2] https://www.amazon.com/Unveiling-Retirement-Myth-Jim-Otar/dp/0968963420 https://www.amazon.com/Unveiling-Retirement-Myth-Jim-Otar/dp... [3] https://earlyretirementnow.com/safe-withdrawal-rate-series/ https://earlyretirementnow.com/safe-withdrawal-rate-series/ [4] http://realworlddivorce.com http://realworlddivorce.com [5] https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...

by gerad 4y ago

fsflyer 4y ago

My first comment was based on the simplistic onboarding flow before being asked to login. I've poked around the site a little more and have additional comments. The site is for folks that are ok with a probability of success. There are folks that want better guarantees, probably annuities. Wade Pfau, who has been researching retirement planning for 15+ years has a good description of the issues in his Retirement Planning Guidebook [0] which talks about his RISA model. Looks like he's now productized it at [1]. I looked at the asset allocation recommended over time, and I think that should be adjustable based on the users level of risk. I like your guide concept, but the content feels pretty generic. I think any product in this space needs to have a big emphasis on educating the user about the issues. I would like to see this integrated into the calculator better. Maybe a report that lists the issues that the product handles, then customizes the list for this particular financial plan showing if and when in the plan the issue applies and gives further resources to learn about the issue. Order it by when, so the customer has a financial issue learning plan. In the education theme, the product is making lots of unstated assumptions now, and it makes it hard to interpret the output. As my teachers (and probably your teachers as well) said, ALWAYS state your assumptions. Another way you can make your product more usable is to figure out what the top questions your customers want to answer and then build guides to show them how your product answers that question. I see you've got a part time position open to figure out customer needs, this could make it easier to close a sale. It may be possible to go through the forums at various groups like Mr. Money Mustache, Bogleheads, etc to find common questions. Speaking of education, the algorithm needs to be well documented. Otherwise it could be based on a random number generator for all I know. Is it based on historical market data? Or is it Monte-Carlo based? If it's MC, then what data is generated and how? Is the data different on each run, or is it the same MC data used for every run for all folks (essentially treated the same as generated historical data.) Jim Otar has some good comments about MC in his book "Unveiling the Retirement Myth" [2]. He's not a fan of most Monte Carlo data generators, but gives a set of tests that any good MC generator should pass. He's a fan of using historical data. Karsten (a retired economist) at Early Retirement Now [3] has done quite a bit of work on Safe Withdrawal Rates using historical data above and beyond what Began has done. Have you used Financial Engines at all? It was around a dozen years or so ago much like what you are building that William Sharpe was involved in. They tried to partner with 401k providers to offer it as an upsell to large companies. I have an old 401k that still has it. They started as a tool for the DIY, but pivoted to managing your 401k for a percentage of assets. A recommendation for you is to make the initial onboarding a big more clear as to what type of account and whose account it is for those that are married. Getting quality data here will help for the features I am going to suggest. Some feature suggestions for you to think about that could be competitive differentiators: 1. Help estimate life insurance needs for folks. There are a number of approaches, income replacement and expense liability matching are a couple common ones. This is a feature that your competitors don't have and fits with the demographic you are targeting. There is a lot of opportunity for education in this area. There is the opportunity for referral income by referring folks that truly understand their insurance needs and are ready to buy. 2. Different forum communities have standardized formats for background data for asking questions. Make it easy to get your data in that format for asking a question. This would mean engaging more with those communities. 3. It looks like the plans go out to about 100 years old. Open Social Security uses five different mortality tables to estimate life expectancy or an entered age, which can tune a plan to meet someone's situation much better. 4. Forced early retirement. It's happened many times in the past and likely will again. 5. Divorce. This is a tough one, but it's fairly common these days, and throws a real monkey wrench in financial plans. The rules differ per state making it lots of work. Some have fairly clear rules that could be implemented, others are kinda up to the judge. Real World Divorce [4] may be usable as a survey to get a feel for the scope of the different rules. I'd like to object to your statements "social security relevant (it's better for younger folks not to count on it)" and "it's tough to forecast how much younger folks should count on it, so we've left it out for now" It's really easy to handle this. Look at how Open Social Security handles it. There is a year and a reduction percentage. He fills in defaults from the Social Security Trustee report, since they are required to estimate it based on current law. For younger folks the year probably doesn't matter, since it will happen before they withdraw, just the percentage matters. This is an opportunity to educate folks rather than perpetuate the fear that it won't be there for them. For many of them it will probably be their largest income source in retirement even after the reduction. I don't think the complexity of the questions that early retirees have like Roth conversion or 0% cap gains is any more complex than the buy a bigger house question. Look at the complexity of the NYTimes Buy vs Rent calculator [5]. I suspect the buy a bigger house is similarly complex when you really dig into it. Happy to answer any other questions you have. [0] https://www.amazon.com/Retirement-Planning-Guidebook-Navigating-Important/dp/194564009X https://www.amazon.com/Retirement-Planning-Guidebook-Navigat... [1] https://risaprofile.com/risa-how-it-works/ https://risaprofile.com/risa-how-it-works/ [2] https://www.amazon.com/Unveiling-Retirement-Myth-Jim-Otar/dp/0968963420 https://www.amazon.com/Unveiling-Retirement-Myth-Jim-Otar/dp... [3] https://earlyretirementnow.com/safe-withdrawal-rate-series/ https://earlyretirementnow.com/safe-withdrawal-rate-series/ [4] http://realworlddivorce.com http://realworlddivorce.com [5] https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...