By Dr. Jim Dahle, WCI Founder
We recently checked out a fancy retirement software product called NewRetirement. We felt it met our high standards of quality, and we wanted to bring it to the WCI community as a recommended product.
Naturally, as a for-profit business, we also negotiated an affiliate agreement with them, so if you sign up via the links for their paid (not free) version, we also get paid. It's not a very expensive product, though, so the affiliate payments really aren't all that high. In fact, we put off NewRetirement for a year or two because it just didn't make business sense for us to promote a product like this at such a low price point. However, it's a really good product, and even if we don't make any money from the partnership, many WCIers are still going to benefit from being introduced to it. Plus, we negotiated a 20% discount for you. All right, I think that's enough conflict of interest disclosure. Let's get into the review.
NewRetirement: The Best Retirement Calculator Out There
There have been retirement calculators out there for many years. Even Personal Capital does some of this. Most hardcore DIYers have heard of FIRECalc. MaxiFi (formerly ESPlanner) is also a worthy competitor with some advantages and disadvantages when compared to NewRetirement. However, I think NewRetirement is the first one you should check out, and it's certainly the only one you need. The truth is that they're all very cheap, and all of them have some sort of free version to get a taste for them. You could just get them all.
NewRetirement provides a robust set of information—even just the free version—and it's incredibly easy to get started. In fact, once you sign up (10 seconds), the first thing that's offered is a super fast, friendly way to get started while providing a minimum of information. Within five minutes, I found out that my hypothetical doctor (someone my age with a $340,000 income, a $2 million nest egg, no debt, and spending a little over $15,000 a month) had a 99% chance of retirement success.
Once you get through the preliminary stuff, you end up on this main screen. This is where the software starts to get really powerful. Of course, you are regularly reminded about what you get if you sign up for the paid version ($10 a month with a free 14-day trial) that you're not getting right now.
Financial Planning Software
I felt like NewRetirement was so much more than just a calculator, though. It's actually pretty robust financial planning software. The quality of the financial plan it generated was actually far higher than I have seen come from many professional financial advisory firms. When combined with a financial literacy course, such as our Fire Your Financial Advisor course, this could be a powerful tool for someone looking to bridge the gap between hardcore DIY financial planning and paying thousands to a financial advisor.
Features
The calculator starts with all of the features you would expect. While easy to use, it's not a simple calculator. There is a lot that goes into these calculations, which means you have to input a lot of data. The more you put in, the more accurate the projections and figures. Garbage in, garbage out. Some of the data you can put in include:
- Retirement age for you and your partner
- Social Security age for you and your partner (and there's a cool tool to help you optimize this)
- Housing expenses
- Healthcare expenses
- All other expenses
- Current income
- Current assets
- Asset locations (i.e. types of accounts)
- Debts
- Legacy goals
More powerfully, it allows you to change all kinds of assumptions but makes it easy by putting in something so you can get started. So, you start with something reasonable, and then you can change it to see how much your retirement success and income depend on that particular variable. Some of these changeable assumptions include:
- Inflation rate
- Social Security COLA
- Housing appreciation rate
- Medical inflation rate
- Expenses
- Withdrawal strategy (three options)
- Tax rates
Perhaps most importantly, almost everything allows you to use “optimistic,” “average,” and “pessimistic” assumptions simply by toggling between them.
The software is not all powerful. While I was impressed it can adjust for the fact that HSAs get taxed differently in California and New Jersey, the software also has some “fixed” assumptions you may or may not agree with. For example,
If you were planning to blend tax-deferred and tax-free withdrawals in retirement, this software can't handle that. That's an awfully nuanced thing, though. If you're thinking about things like that, you probably don't need software like this to help you set up your financial plan.
NewRetirement has also thought about a lot of stuff that you probably haven't. Consider this built-in assumption:
You can pay thousands of dollars for a professional financial plan, and they may not get into anywhere near that level of detail with their assumptions. You can change this one, too. The power of the software is really in the number of assumptions, the flexibility of the assumptions, and the fact that they start with something reasonable there to help you get going.
It also allows you to build a “baseline plan” but then create a number of “scenarios,” essentially variations of the plan to see how they might play out. That might include retiring now instead of later, changing an asset allocation, getting divorced, or just being much more pessimistic about everything.
Digital Coach and Live Help
There are two other features worth mentioning. The first is the digital coach; it's like a little built-in financial planner. This kicks in somewhat even in the free version.
After my five-minute financial plan, the digital coach told me they had 12 suggestions for me. These were the 3/12 I could see with the free version. It very politely informed me that if I really want to do well investing, I should be a passive investor.
There is also an option to get on the phone with a CFP. While you don't get THAT for $10 a month, it averages only $1,500 a year, which is awfully inexpensive financial planning rivaling the very most cost-effective of our recommended advisors. Naturally, that makes me worry a little about the quality of the advice since I haven't vetted the CFPs picking up the phone for NewRetirement.
There are actually four versions of the product:
-
- Free version: Basic plan, “what if” scenarios, Monte Carlo analysis, Social Security Explorer, Roth Conversion Explorer
- PlannerPlus ($120/year): The full planner software for a robust plan, the ability to compare scenarios, access to live Q&A sessions
- PlannerPlus Academy ($270/year): More education
- Get a CFP (~$1500/year): Get professional help
Everyone reading this blog post should go get the free one today, but if you actually need or want financial planning software, the one to get is the $10 per month ($120 per year) PlannerPlus version, and that's not just because that's how WCI gets paid. It's because your time is valuable. If you're actually going to spend the time to use this software to do your financial planning, $120 is nothing. What's an hour of your time worth? Exactly. Get the full version.
Weaknesses
Naturally, no robo advisor or software can really, truly replace an expert. For instance, this software is not doctor specific at all. Its assumptions do not model the typical financial pathway of a doctor. For instance, if you filled it all out as a resident using your resident income, assets, and expenses, the outputs would be practically useless for you because your life will soon dramatically change.
The student loan section is also completely inadequate for someone with $400,000 in student loans who's considering PSLF, and I'll bet dollars to donuts even the $1,500 a year guy on the phone isn't an expert on managing physician student loans.
It also uses as its main output the “chance of success” rather than telling you how much you can spend (“income smoothing”) like at least one of its competitors. That's more of a philosophy thing, though.
The Bottom Line
Like almost anything else with financial planning, you'll get out of this tool just as much as you put into it. If you want a five-minute confirmation that you're doing fine, it'll give you that. If you want to spend hours with and use it to educate you and your partner about many of the ins and outs of financial planning, it will also do that. Modeling scenarios and changing assumptions are its strengths. It is also very useful for tweaking your plan slightly or just updating it every year. NewRetirement is well worth your time and certainly worth your money, especially now that WCI has negotiated a 20% discount off the first year for you. Now, it's $8 a month, not $10. You're welcome.
Sign up for a free trial of NewRetirement today!
What do you think? Have you used NewRetirement? What did you like and not like? Comment below!
Just as an FYI, I do not see the “PlannerPlus Academy ($270/year)” as an option on their website. However, the “PlannerPlus” level membership does include the 8 class / 8 week “Build your NewRetirement Plan Intro Class”, which can also be purchased alone for $50.
Jim, have you found the various retirement calculators useful for your own situation? I’ve plugged and played with a few of these over the years and eventually came to the conclusion that one’s withdrawal rate (and by corollary, how big a pile of money you have) is the best determining factor in whether or not a portfolio succeeds or fails.
I am glad you pointed out that issue with the withdrawal order, because if you’re trying to do tax planning and you want to keep the tax deferred account from getting too big and spin from that during your 60s before RMD‘s kick in, it’s not helpful that the program automatically pulls out of your taxable account. For me the whole reason I didn’t subscribe to this plan years ago is because of this. I wish they could vary the order of account draw down manually. Maybe the software has been updated since then.
Hi Moon – I am with NewRetirement. Although the Planner defaults to a traditional withdrawal strategy, the software also provides a variety of manual withdrawal methods that may offer more tax efficiency for certain individuals.
Toggling “Optimistic” to “Average” assumptions changed my success rate from 90% to 27%—a change of about $5 million. I know that’s not a software problem, but just shows the limitations of financial planning in general. You have to make a lot of assumptions, and minor tweaks result in huge difference in outcome.
Limitation or opportunity? Yes, there is a huge range of possible outcomes when it comes to planning. We (I am with NewRetirement) advise that you come up with a plan using reasonable optimistic assumptions and then stress test those plans with pessimistic use cases. This will enable you to develop a baseline plan (a plan you are acting against) that you are comfortable with and has contingencies in place for when or if things don’t go as expected. (You can maintain up to 10 different scenarios in NewRetirement and do side by side comparisons, enabling you to make better – more informed – decisions about what you do about your money).
Nothing more than a paid add. If you want a real financial planning tool, The Complete Retirement Planner is an excellent one, is easy to use, and is less expensive. Been using it for years and it gave the same results an advisers plan offered.
First, it’s ad, not add.
Second, it’s not a paid ad, it’s an affiliate marketing partnership. Meaning we don’t get paid unless you buy. Surprised you missed that given it’s in the first couple of lines of the post.
MaxiFI/Complete Retirement Planner seems to be their main competitor. Comparisons show some like one and some like the other for various reasons.
First: the “ First, it’s ad, not add.” is super snarky. I felt like this was an open space to discuss financial planning. I appreciate suggestions from others. You shared your affiliated marketing partnership and then someone else shared their financial planning tool that they preferred, in the comments. It all seemed pretty benign to me. Am I missing something? This type of response from you seems odd. Someone pushing something without accepting criticism or feedback can’t be good. Second: I hope I spelled everything correctly. I don’t want to get shamed.
First you get criticized anonymously for the article. Then you get criticized anonymously for the comment. Then if you don’t reply, you get criticized for not replying. Then if you turn off the comments to save the headache, you get criticized for not providing an “open space to discuss financial planning.”
Imagine you have 3-4,000 of these articles on the internet. And the software funnels the comments on every one of them into one place so you can read the entire internet’s thoughts about all of them every morning. Then do that for a decade or so. And somehow manage never to let a little snark into your replies. It’s not as easy as it looks. But I do understand why many bloggers have just turned the comments off on their blogs and I’ve thought about doing it many times. People are just nicer by email than they are by blog comment. I probably only get a dozen troll comments a year by email, but it’s a rare day that I don’t get one in the blog comments section.
Look, if you want to buy NewRetirement, buy it. If you don’t, then don’t. If you want to buy their competitor, do that. If you just want to try out the free version, I don’t get paid. It’s really up to you. No skin off my nose. I thought it was a cool resource to share with the audience and possibly even a way to make some money for blogging instead of doing it for free. I guess I’ll know in a few weeks if anyone bought it. Until then, I guess I’ll just read more comments from people who thought we blog for free and are appalled to find out we might actually make money every now and then from a blog post. Or the people who are offended when we reply to those people. Or the people who are offended when we reply to the people who were offended by our first reply. And so it goes.
At any rate, if you really don’t like snark, you should DEFINITELY avoid the comments section of anything about whole life insurance.
did I miss somewhere on how $140k/mo ($1,680,000 per year) is calculated.
I guess maybe that was for the C suite hospital CEOs and not the doctors pathway.
Not sure what you’re referring to or if that’s just a random anti-CEO comment.
The example, above, with 2 million in the bank, showed 140k $/month at 66 y/o. Must have a short life expectancy entered?
Yea, not sure what happened.
Yeah, the “$140,000/mo” in income for the average scenario for a 66-year-old has to be a typo…
…maybe per year?
Yes, one of the screenshots shows $140k/mo retirement income. That’s about $42m principal balance on a 4% annual withdrawal rate. Dr. Dahle is doing well (but probably a projected balance).
Now I see what you guys are talking about. Ha ha. I have no idea what I put in the calculator to get that screenshot.
I am going to try this out.
What are the default assumptions the tool makes for stock and bond market returns, and how adjustable are these assumptions within the NewRetirement tool?
Hi Tom – I am with NewRetirement. PlannerPlus subscribers get a lot of control over assumptions. You can enter both an optimistic and a pessimistic rate for: investments, general inflation, medical cost inflation, Social Security COLA, and real estate appreciation. Reach out in the chat if you have any questions once you get started.
Thank you! I will be trying it out tonight. It sounds like a great product!
Thanks. We are very proud of what we’ve built and are also very open to feedback.
I created an account and really like the user interface. I like that it allows me to account for my spouse’s SS, and what year she starts. In addition, the RMDs automatically show up. With the paid version, can I adjust what years I do Roth conversions and how much each year? If I do adjust the Roths, will that adjust the RMDs as well?
In addition, is there a way to add state income tax for planning purposes?
Hi Tom – I am with NewRetirement. PlannerPlus subscribers have the ability to model state income taxes as well as adjust Roth conversions. If you have further questions feel free to message the services team directly through the Planner Chat in the lower right corner of each page.
I’ve enjoyed the open discussion on this topic. Under full disclosure my company, My Financial Coach, is a recommended financial planning advisor with WCI (under recommended advisor tab). There is no revenue sharing etc. We are fee-only and are not selling any products.
Ok, regarding calculator. Like most it is dynamic and can do lots of things, some better than others. However, in my 30 plus years of retirement planning experience I see many factors come into play, and it takes a human touch using the tools to come to the best conclusions.
As I discussed in my WCI presentation a few months ago in Phoenix, it’s not how much you accumulate but how much you get to keep. Taking advantage of pre-tax plans during contribution and accumulation needs strategies during the distribution phase to minimize taxes or eliminate them. You need to work with tax experts during this phase, something the calculator doesn’t do. With one client recently, he sold his office building, which normally would have been all capital gains and was able to eliminate a large percentage of the tax. The calculators are not set up to think out of the box during this phase.
At MFC we have a similar calculator run by a CFP who looks at the contribution, accumulation and distribution phases of retirement. Then they add the human touch with subject matter experts.