How do you update ESP assets


I've been using ESPlus for almost 2 years and I have a question concerning how one should periodically update the program with actual asset performance.

Is it appropriate to periodically update asset/retirement values during the year? Or, should I just wait till year end and compare Regular Asset value against the ESP prediction to see how the plan is going? What about after year end? Is this the point to update the asset values to get a more accurate discretionary spending plan going forward. Of course this would be past on the most recent market performance and making spending adjustments based on it would go against the consumption smoothing that is the basis of ESP.

How do you use ESP in this regard?


There's not necessarily one answer for this. Since the program's reports and calculations are on a year-by-year basis, I try to update first based on year end values. In late January/February, there is typically a software update that includes the "new" tax rates, Social Security COLA, etc. information for the new year so I use this as my baseline update. During the year, you can adjust/optimize/stress test/perform "what if" analysis or add/delete other factors that are relevant to your specific situation.

Since there are always variations in returns (among other factors), you may want to add in a safety factor to have your actual spending a bit less than the "ceiling" that ESPlanner recommends, in case things don't go as planned. Also, in case of large market drops such as 2007/8, you can model these through "what if" analysis to see how big a hit your results will take under adverse scenarios.


Thanks Brian,

Your Jan/Feb update is what I did at the beginning of this year and plan to do the same next year.

I use the Monte Carlo simulation with the Cautious spending model for roughly 3% real returns. We also spend significantly below this level given we still have 3 children to put though college. Our annual spending for 2014 looks to be coming in at about 50% of ESP Discretionary Spending recommendations.

It will be interesting to see the new recommended discretionary spending after the new year update.

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