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I am told that most financial planners use a software where they put in all your information and software provides reports and projections based on the input.
These financial planners charge $2-5K for this service.
Does anyone have any experience in using similar software? I don't mind paying for software it is saves me paying 2-5K to financial planner for a one time report

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rated:
I have no info to share as to what software is available to you, but I will say that as someone that works with similar software daily, the software is only as good as the assumptions behind the scenes.  It does require some level of expertise to set up the program for reasonable assumptions and to properly project cash flow, inflation, and numerous other factors.  Our firm provides ongoing Monte Carlo analysis as part of our planning process which is included in our annual fees.  I haven't ever had anyone specifically ask for just a monte carlo analysis in a fee based arrangement but given that it only takes me around an hour to gather information, input it into the software and another 30 minutes to review it with a client, I wouldn't charge anywhere near that for it.  That said, I also wouldn't be willing to do that as a stand-alone service.  By their very nature, these simulations are not terribly accurate - they run thousands of scenarios (or however many scenarios you set it up to run) and give you statistical probabilities of your likelihood of success.  The problem with this is that it assumes you wouldn't adjust your spending (up or down depending on assets), that there will be no unexpected spending, that inflation is a fixed %, that you likely won't start out with a -50% return in year 1 of the analysis--all things that are entirely possible.  It's good for establishing a starting point (a rough idea of how much you should save per year to be able to spend $x in retirement, adjusted for inflation), but don't expect it to give you a perfect road map for your financial future.

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Try Firecalc.

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Look into "robo investing."

Or just buy a Target fund.

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Stubtify said:   Look into "robo investing."

Or just buy a Target fund.


Planning and investing are 2 different things, though investing is part of financial planning, it's not at all what op it's asking about.

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raringvt said:   
Stubtify said:   Look into "robo investing."

Or just buy a Target fund.


Planning and investing are 2 different things, though investing is part of financial planning, it's not at all what op it's asking about.

  Agreed. I am looking for a software which can tell me how much to save for how many years to have certain income in retirement. The software should use additional information on how this amount is currently invested e.g stocks, cash, real estate etc.

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loyosewe said:   
1)  I am looking for a software which can tell me how much to save for how many years to have certain income in retirement.

2) The software should use additional information on how this amount is currently invested e.g stocks, cash, real estate etc.


  
1) Easily found.  Calculators all over the place where you put in how much you have and the return you are getting, your age, your planned retirement age, and how much you want to withdraw per year in retirement and it computes the missing pieces.  Here's one - https://retirementplans.vanguard.com/VGApp/pe/pubeducation/calcu...

2) Yeah, you're not going to find that.  Not even with Financial Planners.  Anything like that would be based on broad assumptions which you should have the ability to do yourself.  

In fact, even with a company like Vanguard, their financial planning tools (that they have) don't do sophisticated modeling based on holdings.  They come back with "at your age, you should have X% in stock index funds and Y% in bond index funds.  Of that, Z% should be in international investments.  In addition, their recommendations won't include the tax ramifications of selling your current holdings.  I had Vanguard do a plan for myself and one for a relative.  In both cases, they recommended way more in international investments than I was comfortable with, selling stock mutual funds (theirs) that were managed (Primecap) to put them in index funds, and didn't do any calculations as to the taxes that would be due from the selling.   They also don't hold out anything in cash - and I want 6 months

I cut back international from their 20% recommendation to 10% (and less for me), I went ten points higher on stocks vs. bonds, held out 6 months in cash, and didn't sell Primecap - in fact bought more.

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loyosewe said:   I am told that most financial planners use a software where they put in all your information and software provides reports and projections based on the input.
These financial planners charge $2-5K for this service.
Does anyone have any experience in using similar software? I don't mind paying for software it is saves me paying 2-5K to financial planner for a one time report

Let me ask you this?  Do you have sufficient financial background to be able to do this type of planning with Excel?  If the answer is No, then you are better off talking to someone who does.
All the software does is automate calculations.  There is no secret formula.  You still need to understand the inputs and outputs and the assumptions behind calculations.  Financial planning is more of an art than science, it is about probabilities and "what-if" scenarios.  If you expect it to work like TurboTax, type in some numbers, press a button and have the answer, then the software may do more harm than good.  You may get an answer that is invalid and you won't know it.

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It's kind of a pain in the ass, but I use GNUCash to list out everything. If you have some accounting knowledge, it gives you a very good picture of your current situation. It doesn't do projections though.

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TraveleryMSY already recommended firecalc, it is exactly what you need. Make sure you learn how it works; use the tabs along the top to simulate your current or a future situation.  Pay close attention to the 'Not Retired' tab and use that too. Your total years need to include your years until retirement and your years after retirement.

Modify what you're investing in, expected spending (and change in spending as you age), Possible SS income and at what year. Also model in some large cash out situations like a child going to college or a house purchase for retirement. Every time you hit "submit" those tabbed inputs are taken into effect. Then start to hold all of these steady and change just one variable:

Change the makeup of your stock/bond holdings and see what that does. Then use something to try to screen and hit those % targets.

For fun, hold all numbers steady and change the expense ratio for your holdings (under 'your portfolio') from the default .18% to the 1-2% that some firms assess.

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I have used the Flexible Retirement Planner. They have a basic page to get you the rough cut, then you can go in deeper and add additional cost or income events.

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I-ORP is like Firecalc but allows you to put taxable vs tax-deferred, if that matters to you.

I'd recommend Financial Engines, as they allow you to put in specific amounts of stocks and bonds and list taxable/tax-deferred and do projections, but I don't have direct link.  A number of 401k plans provide access, plus Vanguard does with a sufficient amount in their funds.  My only complaint is that their suggested reallocation is generally very conservative next to mine, and seem to be in love with International Bonds and Funds.

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I guess simply put.... If it was just the software then everyone would be rich. It doesn't work that way.

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chuck1948 said:   I guess simply put.... If it was just the software then everyone would be rich. It doesn't work that way.

I guess that means you shouldn't plan for anything.

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One more vote for FireCalc. I've used it for several years, donating at one point because I'm gotten far more value from it than any other piece of financial software.

It's easy, intuitive and lays out its primary model assumptions plainly.

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Tried to look for something myself many years back but didn't find. Being very comfortable with math and spreadsheets, spent hours and created a custom spreadsheet that models detailed year-by-ear income, expenses (incl details like mortgage, education for kids etc), Fed/state tax rates while earning and retirement, expected inflation, earnings rates, pre-tax investments etc and then does multi-year projection. Didn't model detailed scenarios like investment mix etc. as I didn't need it for this particular purpose or SS as income due to its long-term uncertainty.

Time consuming (creating, grappling with differences in Excel, OpenOffice, LibreOffice) but very helpful for my needs including gauging how behind/ahead we are. Might look into alternatives folks here have suggested.

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chuck1948 said:   I guess simply put.... If it was just the software then everyone would be rich. It doesn't work that way.
  
Do a study controlling for amount invested and investment knowledge but only give half of the participants the software. Then see if the half that had the software are richer 5, 10, 15, 20 years later. Maybe it does work that way...

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Madfientist.com has some spreadsheets and tools that may be helpful as well. +1 on firecalc and i-orp.

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loyosewe said:   I am told that most financial planners use a software where they put in all your information and software provides reports and projections based on the input.
These financial planners charge $2-5K for this service.
Does anyone have any experience in using similar software? I don't mind paying for software it is saves me paying 2-5K to financial planner for a one time report

  I wouldn't look at it as paying for the report. You're paying for their advice and judgement, along with the report. If their advice stops you from doing something dumb, it's going to be well worth it. If you're already invested in an appropriate mix of stock/bond indices and want to figure your risk of ruin based on your investments and spending rates, just DIY on Firecalc. There's a lot of individualized discussion of this kind of stuff on the Bogleheads forum. Maybe raringvt will be nice enough to answer appropriate, specific questions here that might help us all.

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Ask them to do a cost analysis of the long term cost of their fees (fees compounded over 30 years). Their 5k service will be 50k . Better yet, ask the financial advisorts who charge 1-2% of assets under management to calculate what their real cost is after 30 years. Now THAT would be interesting.

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