I have been playing with ESPlanner for the better part of a month, and like Dan Royer, I have come to rely primarily on the simple “economics-based planning” method, even though the Monte Carlo capability was an attractive point in choosing the software. The “economics-based planning” is easier to understand, and of course takes much less time to generate reports. I am close to retirement (I hope), and going forward use 1% to 2% real return estimates, partly to reflect my feeling that returns over the next couple of decades will be less rosy than history would suggest, but mainly to cushion sequence-of-returns risk.

Nevertheless, it would be nice at some point, after I settle on suitably pessimistic expectations for taxes, social security benefits, etc., and refine the balance between qualified and non-qualified asset spending (using “key ages” choices, etc.), to look at the Monte Carlo stuff. However, I see a couple of problems with this.

First, I think the defined asset classes incorporate too optimistic an outlook (not your fault, they’re just built from history). It appears that the only way to define an asset class with different mean returns, etc., is to input ten years or more of data, and let ESPlanner then tell me what I’ve got. After a lot of experimentation, I am not making much progress on, for example, defining a modified large cap equity asset class that is similar to the ESPlanner-supplied one, but with a lower mean return. I gather from questions in this forum in previous years that it used to be possible to define an asset class by inputting mean, variance, etc., but this was taken away in subsequent versions of the software. I assume you had some good reason for removing this capability? Or do I misunderstand?

Secondly, when running a Monte Carlo analysis, one is offered a choice of three (somewhat arbitrary, but on the whole quite reasonable) spending levels, then given a set of tables that one can study to get a sense of how likely one is to be able to maintain the chosen spending level. It is a rich set of data, but sometimes a little hard to interpret, at least at first glance.

Other Monte Carlo calculators with which I am familiar mostly (and simplistically) let you specify a level of spending, initial assets, and a time frame, then give you the probability that that level of spending can be sustained until death – e.g. 85% likelihood of success, or 15% likelihood of ruin. Of course, these calculators allow none of the complexity of input that makes ESPlanner so great. But I wonder, would it be possible at some point to add that capability to ESPlanner? I realize ESPlanner provides far more, but it would be nice to be able to get a “quick and dirty” idea of success, without studying the tables. Or, given ESPlanner’s multiple inputs, and focus on smoothing, is this not even theoretically possible within the established framework of the program? Or is it theoretically possible, but too difficult to program? Or is it easy to program, but with the result that ESPlanner has to run for impractically long times to produce results?