 Welcome to the Bogle Heads chapter series. This episode was hosted by the Chicago Virtual Chapter and recorded March 18th, 2021. It features Stuart Matthews, the designer and developer of the Perlana Retirement Calculator. Bogle Heads are investors who follow John Bogle's investing philosophy for attaining financial independence. This recording is for informational purposes only and should not be construed as investment advice. This is one of the user worksheets that's just part of the Perlana Gold Calculator and in it I've just entered a summary of this scenario that I've built. So let me quickly step through that so you'll have some idea what we're trying to, where I'm going with this demonstration. This is just one example. It's not a trivial one, but it can do far more complicated things than this. So just take it from the top. All the demographics, we're talking about a married couple whose ages are 57 to 55. They apparently live in Maryland and they plan to relocate to Texas whenever they retire in several years. The general inflation rate assumed is 3% with healthcare expenses inflating at 2% above that. As far as the federal, let's see, the calculator does detail federal and state tax calculations. So the federal tax law soon is currently the tax cut and job act of 2017 up until its sunset year of 2026, at which time it reverts back to the pre TCJA of 2017 laws with tax savings corrected for that year 2026. The initial balances of the accounts in question here are 525K in the husband's tax deferred accounts, 150K in the wife's tax deferred accounts, 225K in regular investment accounts with a cost basis of 170K, 10K in checking and savings accounts, and 50K in a 529 plan for the children's education. As far as the portfolio is concerned, they have asset classes of money markets, stocks and bonds with real rates of return of minus 2%, 2%, 5% and 2.5% respectively. And then the allocations for these accounts are all the same. They're 60% stocks and 40% bonds until the retirement date, after which they get a little bit more conservative and go with 10% money market, 40% stocks and 50% bonds throughout their retirement years. As far as income is concerned, he earns 150K, apparently, increasing in 3% a year, which is at the inflation rate, until his retirement date, which will be May 1st of 2024. During this time, he'll be making personal contributions to his 401K of 1245K, with a company match of 6250. She'll be earning 40K, increasing 3% a year until her retirement date, which is the same as her husband's. She'll be making $4,000 contribution to her 401K with no company match. When he retires, he'll have a part-time job until he turns 67, and he'll be self-employed in this job. And he'll earn 10K a year, or an increase in 3% per year. Also at the time of his retirement, he'll receive a $50,000 fixed pension, which is to say it doesn't have any COLA associated with it. It begins on his retirement date, and he will have a 50% survivor option should he die before his wife. In terms of social security benefits, he'll earn $30,000 a year at his full retirement age of 67, and she'll earn $22,000 per year at her full retirement age, which is also 67. However, he'll be delaying his benefits until he reaches 70, but she'll go ahead and start hers at 67. In 2030, they anticipate an inheritance of $100K in a brokerage account from his parents as well as his dad's $50,000 IRA. And then she'll do some part-time work to hobby in her $2,500 a year from age 55 to 60, which will be taxed as ordinary income. In terms of expenses, they currently own a home which they're still paying for, and they'll be downsizing at the time of their retirement. So they purchased this home in 2010 for $300K, is now appreciated up to $400K. They still have an outstanding mortgage at $79,500 to 4.5%, a monkey payment to $1338K. They do have a tax, public taxes, insurance, maintenance and utilities, which add up to about $15,100. They'll be selling that house when they retire and downsizing for a house that is for $300,000 in today's dollars, and then they'll leave it in there after. And this operating cost will be $13.9K. They have two cars currently in a general plan to replace them every 10 years. They've got two children, which are about to start a four-year tour of duty in college, which costs $25,000 per year each. And the first of those will be paid for by a $529 plan, and the other will be paid on the fly. Healthcare costs are being modeled here, and they will be varying substantially as they transition from their working years into their Medicare years. They'll start at $3,000 a year while they're both still working through a group insurance plan, but that will peak up substantially higher when they retire, and they'll go on to Obamacare, and their premium will be $15,000 a year prior to any subsidy. And we'll talk about that a little bit more when we get to it. And then eventually this will taper off as they both go on to Medicare. I'll show you how that works. Their discretionary expenses will be $25,000, and in today's dollars during their working years, and it will go up to $35,000 in their early retirement years as they do a substantial amount of traveling, and then it'll drop off to $22,000 in late retirement. Now, should one of them die early, these expenses will be cut by 40% upon that death. They also intend some one-off expenses to fund the marriage of their children. They're anticipating $15,000 in today's dollars for their son in $22,000 and $25,000 for their daughter in 2030. Finally, they have a charitable contribution of $10,000, which will become a qualified charitable distribution when he reaches age 70. So what I'm going to do here is just model, show you how this is modeled in Prolonga Gold, then do a baseline analysis of the probability of this couple reaching the end of their expected lifespans without running out of money. Then we'll do some other thing. We'll do a quick bear market analysis on their plan. We'll show a Roth conversion at some point. We'll show you how they can optimize their Social Security start ages. I'll tell you what ages they plan, but there might be better dates. We'll take a look at that. Then we'll look at the sensitivity of their plan to changes in key variables, like rates of return, inflation, et cetera. Then we'll do a couple of what-if scenarios like an early death, loss of the pension. Then finally, we'll just look at how the tool can deal with alternate spending strategies. What I did here was show you specifically what they plan to do, or there's other ways the tool can do spending strategies as well. So with that is the scenario that I want to show you how we model. I'm going to jump over to the calculator itself. I just took a shortcut and here it is. This is the home page. So the calculator, again, as I said, it does not take you by the hand and walk you through. You have to think your way through this thing, but it's organized logically, and it's broken down functionally. And you navigate among those functions by this navigation bar at the top of the page. So the home, financial assets, income, and expenses functions are primarily input functions. And then the tabular projections, graphical projections, and reports are primarily output functions. And then the analysis function is a combination. It's got some inputs and it's got some outputs. And that's where we're going to find the Monte Carlo analysis and the historical analysis, social security, start-age optimization, Roth conversions, and other things. So we're going to just start off on it. It's going to walk through this thing left to right, start it with a home page, and walk through these various functions to show you how the scenario that I just described is input here. So again, I said this is Excel. You see the Excel menus at the top and it's basically table oriented. But it's designed so we don't need any of these Excel menus at the top. So I'm going to get rid of them by clicking this link right here. It says, hide those Excel menus. But they're gone. Okay, we don't need them. Okay, so we're talking about a married couple here. So this is a toggle button. If they were single, if Joe was single, we just clicked that. And if Joe is single, they would gray out the boxes associated with his wife. But right now, we're going to bring Jane back. So you see the names are Joe and Jane. These are their birth dates. And then the two of them calculate their age based on this birth date. This is their age on January 1st of 2021, which is here we're going to begin this model. So basically this page is collecting some very fundamental assumptions such as their life expectancies and then their assumptions relative to inflation and taxes. And I didn't mention up front, but the two of models, three independent, at least large, mostly independent scenarios, simultaneously. And you'll see most of the pages that we're going to walk through have those, the inputs for that function for that scenario listed side by side. So this part of the table here are the inputs for scenario one. These are the inputs for scenario two and these are the inputs for scenario three. So for a given scenario, the tool has to collect inputs across all of these functions. We need to give it these basic assumptions. We need to talk about financial assets, the income and the expenses. So each page contributes some part of a given scenario. Again, they're free and you can name them down here at the bottom. So this is a short name and whatever these short names are, it appears here. You'll see that repeated on most of the other pages. You can put a longer description of each scenario here just for your own reference. I did say up on the when I was defining the scenario, the tax law in effect is the tax cut and job active 2017. So in that is going to revert back to the prior law in the year listed here. So it's 2026. But if you think that's not going to happen, you can change that whatever date you want it to be. You can delete it and in the TCJ 2017 will go on forever. OK, so that is basically what we do on the home page. So then I'm going to move on to the next page, which is has to do with financial assets. And here you're going to see that there are some some additional pages which fall under financial assets. Initial balances management asset classes and so on. So that's the first and I'm just going to walk through them. I'm not going to do all of these. I want to hit the ones that are pertinent to our example here. These are the initial account balances. So the so the items in gray are the the account types that pro line of gold models. So there are the tax deferred accounts for the for the for Joe or his one and his joint wealth accounts. They're treated to join by the by the calculator, regular investment accounts, inherited accounts and they can be traditional and raw for husband and wife. And then your cash accounts, such as your checking and savings accounts, qualified tuition plans, 529 plans and then health savings accounts. So these are the entities that are modeled by the by the tool, the ones that I'm selecting here. So but each but each of them here contains additional sub accounts that you can you can enter here. And these are strictly here to help you enter in your initial balances. It does not actually model these the sub level accounts. The only model is the total account here. But initially I said the. So here is the the whether that 425 K and Joe's account. There's 100 K in his wife's account, 225 K in the regular investment accounts, of which there is a there is some cost basis here. So they so there is currently $55,000 unrealized capital gains. As part of this 225 K in these in these accounts, there are no inherited accounts as of the start of the model. And $10,000 in the checking and savings and $50,000 in the 529 per total starting balance of $785,000. OK, I'm going to move now to the management page. There are a number of things that can be done on this page. The one that I'm going to just focus on briefly is the withdrawal priority table. Should we get into a situation where the couple bid model has a negative cash flow? We need to talk about the withdrawal priority. Where we go to get the money to cover that negative cash flow? And that's what's done with this table. There are the choices are the regular investment accounts, the year, the husband's tax deferred account, the wife's tax deferred account and the loft accounts. Those can and those can be put in any order. So I think that there's there's 24 ways you can arrange that. And those are listed here in this program and you can pick whichever one you want. I picked the first one. That's one that actually tends to be the best. And then you can pick a different withdrawal priority for each of the scenarios. This table does other things. You can see there are a number of things down below. But at this point in time, I don't think I want to go into those. I'm going to move on. The next thing is asset classes. So one thing that may separate the Perlana calculator from other calculators, it doesn't simply ask you what rate of returns you think you're going to get on a given account. It derives that from your underlying asset classes and from an asset allocation per account. And on this page, we're talking about the asset classes. And it can be as simple as a single asset. If you really just want to say, I just want to specify my rate of return is 5% or 7% or whatever I want it to be. I can just I can just say, I'm going to just use one asset. And I'm going to just for the sake of this example, I said, I'm going to show you how we do that with scenario three. I'm just going to call it going to keep it simple. The people keep it simple asset with a real rate of return three and a half percent and a standard deviation five percent. But but if you don't want to keep it quite that simple, you can do something else. But there are up to 10 asset classes that you could enter. I personally keep it simple with with maybe two or three. This is kind of what I use. These are not necessarily my numbers, but these are the asset classes that I tend to use. And if you want to go from something complicated to just default, you can click this button here and it will load this in as a default setting. So for this example, I've said the money market asset class for scenario one has a real rate of return of minus two percent. In other words, it's it's falling behind inflation, but has very very small standard deviation. So a very consistent for the stocks. I've said a real rate of return of five percent with a 20 percent standard deviation and bonds real rate of return of two and a half percent with a seven and a half percent standard deviation. So and all of these of the three scenarios use the same same assets with the same assumptions about their rate of return and standard deviations. The five twenty nine plan, it doesn't get into the it's not as complicated as asset classes and asset allocation. But these use do simply specify what is the rate of return you think they're going to get on your five twenty nine plan investments and what rate and what standard deviation. So I mentioned earlier that the tool does fixed rate. I think I mentioned it does three types of analysis. One is fixed fixed rate analysis where this uses an average rate of return each year. And these are those average rates of return. But for Monte Carlo analysis, these are the arithmetic means. And these are the standard deviations which are used to generate the random rate of return every year in that simulation. More on that later. OK, so I mentioned to get the rate of return for a given account type. We need two things. We need the rate of return and we need the asset allocation. So I'm going to skip over to the asset allocation right here. This is kind of a this is a busy looking table, but it's but it's not really bad. But it is organized again. These are the the allocations for scenario one. These are for scenario two. These are for scenario three. And then these are the various accounts. There's a regular investment account. The tax deferred account for the husband for the wife. And there's the wealth accounts. And then you can so you soak down below here. Let's just say we're going to so you can specify different allocations for up to five different periods in time. And in this example, I've used two different time periods called period one period two period one begins right now. The twenty twenty one period two begins in twenty twenty seven. You specify those years here. And then it didn't come you come down here and the asset classes that were you that you input over here are replicated on this page. And they show up here. You cannot change them here. These are simply copied from the asset classes page. But here you go in here and you say these are my allocations of these asset classes for each of these accounts. And to make it simple on this example, I've used the same allocation for everyone. And as I said earlier, during the first period of time, while the couple is still working, it's a little bit more aggressive and it will be later to a 60 percent stocks, 40 percent bonds. Bonds when they get retired, they'll invest 10 percent of each county in money markets, 40 percent stocks, 50 percent bonds. So now what the tool does is based on the rates of return. You put over here on this page and this asset allocation here, it generates an aggregate rate of return. And that's a real rate of return. So for period one, it's four percent. For period two, it's 3.05 percent. Little bit a little bit more conservative gets a little bit lower rate of return. And then here these are the rates of return associated with the cash accounts, which would be your checking and savings accounts. So there are no assets associated with them. You just specify the rate of return directly. So I've done the same thing scenario one scenario two are identical. The one I will show you will deal with it a little bit later just for you just want to keep it simple. I don't want to deal with all these asset classes. I just want to tell you what my rate of return is going to be. Therefore, we use the keep it simple asset, which had a rate of return of three and a half percent. So you come over here and say I'm allocating 100 percent of this account to that asset and therefore the aggregate rate of return is three and a half percent. Just like you specified on the asset classes page. So that's so that's how the tool derives the rate of return to apply to each of these accounts. And he uses that in the in the fixed rate and the money column projections. Okay, one other thing we need to talk about before we leave this, the financial assets area is the asset class taxation. And this pertains only to the regular investment. We know how it's so tax deferred accounts and both accounts are simple. Everything that comes out of a tax deferred account is taxed as ordinary income. Everything comes out of the wealth town is tax free. So we don't have to deal with that, but we do have to deal with the regular investment. And so you have four choices of how each of the assets are taxed within the regular investment. Could be just taxed as simple interest could be taxed like a qualified dividend as a as a long term capital gain. It could be taxed as a long term capital gain when it's withdrawn otherwise it's not taxed and or it could be tax free. This is a municipal bond one. Okay, so I've set it up this way to make it simple money markets. I'm assuming our taxes simple interest stocks. I'm assuming we get a little bit of just simple dividends, unqualified dividends taxed at 5%, but 95% of the assets associated with stocks are taxed only when they're withdrawn. Otherwise, they continue to grow. And with the key but simple I said is 50% simple interest 50% when it's withdrawn. And they're all the same. So with that, I am through talking about financial assets and then we'll move on to the income page. Again, it's organized just like the others. These these sets of fields are associated with scenario one. This is scenario two. This is scenario three. Again, you can see that the name we gave with each of those scenarios is listed up here. And then here are the items that we can enter data for this is a very long table. There's three. And for that reason, there are some links up here's a little hidden buttons that allow you to scroll from one major function to the next. So at the top of the page, there's the employment income stream, there's three of them. Beneath that there's pension income. I'm going to click this button here. They will scroll down to bring the pension streams up to the top of the page that are two. So you can see you can identify two pensions for husband and wife for each of the three scenarios. Now we're going to scroll to social security inputs for each of three scenarios. And then there's the windfalls can be detachable there's non taxable windfalls. Then if you still got yet other streams of income you need to specify you can do that down here. There's five of these other income streams can be defined. Each for for each of the husband and wife for each of the scenarios going down further. You can define two annuities for husband and wife for each of the scenarios. Then if you anticipate inheriting an IRA or a traditional IRA or a raw IRA at some point in future you can do that. And then finally you can specify you can find a reverse mortgage. So with that I'm going to just go I'm going to quickly show you how I entered the data that I described for this scenario. At the top on the retirement date I said these this couple is going to retire the same day that's going to be May 1, 2024. And they're both currently working. So I'm going to put that under employment income stream number one, which starts when he's 55 and it ends when he's retired. Now you can define these starting stop dates for any of these, any of these blocks of income stream, you can find them either by an age, by a year by a specific date, or by the retirement date which is here. You can specify this income stream to that date. What you do is just type in an R right there. So this income stream is going to begin immediately and it's going to end on May 1, 2024. So in the meantime, it's going to be $150,000 and increasing to 3% a year, 12,500 going into his IRA and the company is going to kick in 6250. The wife is it starts these two years younger. It's just starting now, her income stream by 40,000 is going to end when she retires on May 1, 2024. That will also increase the 3% a year and she'll be contributing $4,000 a year into her 401k. And so now I'm going to go down to the pension streams where Joe is going to have a he's going to have a pension income stream that starts when he retires on his retirement date of May 1, 2024. It goes indefinitely. It's the amount is $25,000 and that's fixed and it does not increase, but it does have a 50% survivor benefit should he die before his wife. And here I said that Joe will have a $30,000 benefit if he would add in his full retirement age of 67 as well I have 22 K and her retirement age was 67. Joe actually intends to work until he's 70. So this amount will be increased at them. I think 8% a year until he reaches 87 and it will begin. And hers will begin at the full retirement age so it will be $22,000 from the start. I said, Joe will be inherited from his parents of the $50,000 in a brokerage in a brokerage account in 2030, and his wife will be doing some part time work earning $2,500 a year between 55 to 68 goes up at the inflation rate and will be taxed as regular income, but you do have the option of you could borrow something that's not taxable or taxable as capital gains those are options as well. This growing on down. No annuities but there isn't inherited IRA coming at some point they anticipate that being $50,000 a year and then your dollars in the year 2030, and it will have a distribution period of 10 years. Now, so all three of these scenarios are the same I don't think I put any differences. So that's how you define the income. Now we're going to move to expenses. Again, there are a number of sub tables here, different categories of expenses, which have nuances into how they're modeled. So the tool that does not simply say, here's the expense here's a start date here's stop date and here's how much it increases per year. This tool goes way way beyond that. So on this page you can model properties such as home to cars. So as I said, they currently this couple currently on to home, they bought it in 2010, they paid $300,000 as a cost basis for this home is currently going to 400,000. It has a mortgage on it at 75,900 four and a half percent monthly payment is 1338, they expect to sell it in the year 2027, and they will have realtor fee of 6% when they do that. So when they sell this home, they'll be buying another retirement home in that same year. They'll be paying 300,000 for they will be paying cash there will be no mortgage and they don't ever intend to sell it. And I said they had they had a couple of cars they bought one in 2012 and other 2017. You see, this is what they paid this is what they were have a mortgage on one of them. These are depreciating some every year. And when he sells this one, he expects to buy this one to replace it when they sell this one, they're going to buy another one here to replace it. And when they sell that one, they're going to replace it with this one. So that's the that's the purchase in the sale of each other. There's there's 10 rows you can model 10 different properties on this table. So this is the top table is the acquisition and sale information. The table below applies to the same properties. So that whatever name you type in here is replicated here, but these get other costs. These are some costs of ownership, such as property taxes, insurance and annual operating costs, gasoline for cars, maintenance for the homes and the cars, then utilities. This is the one. This is the one page where the three scenarios don't line up side by side because as you can see this table is very wide and just wouldn't work to have them side by side. So they're stacked on top of each other. And so these these links here help you scroll one to the right now we're looking at scenario one, we can look at scenario two by clicking that that now brings up scenario to there. So to click that to bring up scenario three. In this case, they're all identical. And at the bottom of the page, there's some summary information that isn't that is calculated based on the inputs and the tables above. Now that is we're only looking at one scenario at a time in this case. This is probably the first time we've seen this little gizmo here which says you can click this button to specify which scenario you want you want to your three scenarios. The one that's active is listed here. So right now we're looking at scenario one, but I want to go to scenario two I just click that. And this will change the scenario to which is the same. Okay, so this is the left part of the table is a summary across all of the 10 assets. And this is just one of them. This table this page potentially goes to the right about five or six feet. But that's that's very cumbersome to try to scroll. So what this this capability here just lets you look at whichever one you want, you click up or down to look at a particular property. And this is a song. You can so so on the property one the current home so here's the loan is to they're paying that obviously is going towards zero. There's a monthly payment there's value. The value of the house is going up equity is going up these are taxes insurance, and so on. And here's the the second, second property, it kicks in when they sell the first one 2027. And it continues on to the end of the modeling period. So these are the annual expenses when a when a property so there's a there's a windfall net expense is a difference between between the expense and any windfall. Otherwise, it's just the annual expense. These are the tax deductions. And then here's the total equity. So that's basically the high specified property. This tool also does rental property very similar similar to the personal property. But it's more complicated, but that probably only applies to very few people so we're definitely not going to we're going to skip over that in this demonstration. Okay, one other thing I'm going to go back I failed to mention for any of these any of these properties you can do home equity loan as well. You pick the one property you want to do a home equity loan fill out the details here and you can do a home equity loan or a home equity line of credit whichever you choose. We're not going to do that in this example. Okay, now moving on to children, which is second expense category, which is different from all others. It's basically the table at the top deals with college education expenses for the children from the four children and the table below deals with the expenses for those children prior to their college years. So in this example, we got two kids, two kids, John and Sue. John's going to start college this year. Sue's going to start in a couple of years. Therefore, Sue's expenses in the next couple of years are listed here. They're $8,000 a year. So the cost of the annual cost of college is $25,000 that will be going for four years. The parents are only going to pick up 25% of that though. And for John, they anticipate funding that with the 529 plan, which had a initial balance which we already specified. I think it was $50,000 already there. But for Sue, we're just going to do, we're going to pay as we go. So the details of how all that lays out is not shown here, but we'll get to it a little bit later when we get to the tabular projection. Okay, healthcare expenses is yet a different, a different way of modeling and expense. As I mentioned, I was briefing the scenario. These, their healthcare expenses vary quite a bit from during their working years as they go into their retired, early retired years and then ultimately on to their Medicare years. So there are five, fundamentally five periods of time that the tool deals with. The first of those applies to, and all of these apply to married couples in general. Period one is when both partners of the marriage are working. Period two, all of that, and that's when only one of them is working. Period three is when neither of them is working yet none, neither of them has reached Medicare age yet. Period four is when only one of them has reached age 65 and gone on Medicare and finally period five is when both of them are 65 and on Medicare. So for each of those periods of time, there's two rows. One of the first row deals with insurance premiums. The other deals with pocket expenses. So here's the numbers that I've chosen for there and you can see when there is no period two because they both retire, they both stop working on the same day. So they immediately go from period one to period three and this is consequently blacked out. At this point in time they go on Obamacare and then the premiums go up substantially, but this is actual premium they pay and prior to any subsidy being applied, then these are out of pocket expenses. And then as the husband goes on to Medicare, the expenses are starting to come down a little bit. And then ultimately it will go down further when they both get on the Medicare. And so the tool will either it will calculate the the it will automatically calculate Medicare Part B premiums for you if you check this box. If you don't check it, you have another man of this example. I'm assuming the tool is calculating the Medicare Part B premiums. You would still if you have supplemental insurance or Part D insurance, you would need to enter those premiums here or here. Now, if you if any of these expenses are paid with pre tax dollars, you can enter what portion of it is paid with pre tax dollars in these fields. Moving down below now this this part of the table deals with Obamacare Affordable Care Act in health insurance. You just check if you you want to use it you just check the box for period three. These are these pairs are the same as these pairs. So if you're going to you're going to use Obamacare in period three you check that box for period four, you check that box. And assuming you are going to use ACA insurance. This is where you put in the key number, which goes into the calculation of the subsidy. This is one of so this is the cost of the, I think what's it called the second lowest, the second least expensive silver plan premium. So in this case it's $12,000. So your subsidy, the subsidy for this couple will be based on this number and they're modified adjusted gross income. So those two factors go into calculation of the subsidy. There's some tables behind the scenes here, which are used to calculate those values. The thing that you can enter on on this table is what happens after you have one of the spouses I because these are expenses for both both members of the of the marriage. If one of them dies what's going to happen. In this case we're assuming that these costs will be cut by 50% upon the death of the first spouse. And then finally at the bottom, if there's long term care costs that you anticipate you can specify specify that down here. And then it'll cost what year it begins and how long it goes if you leave at length, it begins at that age and lasts forever for the lifetime of this person. So that is how health care is done. Now, moving to discretionary expenses. This is another big table that's got three segments to it, scenario one, two and three. Each of these scenarios is further divided into three time periods with the idea of being your expenses are probably going to be different in your working years and they are during your early, early retired years and then may change again further in your late retirement years. So in this example, all the costs are the, I think they're the same except I put in a bigger number here for period two, which will be the early retired years, anticipating that the couple anticipates doing some trap. So that number may pick up for during this period to but ultimately to get a little bit over at 2037 or slowing down again, and the number comes back down. So, so this so that discretionary expenses are 275 for period one 45 K for period two and then dropping back down to 2525 K during period three, and should, again, what happens if one of the partners of the marriage passes away, these expenses are probably going to reduce and you can specify by how much down here. In this example, I'm assuming they dropped by 40% after the death of the first spouse. Now, now I'll go to the another table miscellaneous expenses. This is generally for capturing one off costs like these weddings, it doesn't have to be one off, but in this case it is John, the son's wedding $15,000 in the year 2027 is one time for the start year and the second year. It's hard to stop here the same same pursues wedding. There's the cost. It occurs in 2030. These are today's dollars but they will be increased up to that point in time. And then the both scenarios use the same, the same data. The tool also allows you to model term life insurance, a whole life insurance program. I'm going to skip over that for this example. And then finally the final piece of expense inputs here is charitable contributions. In this case, I just pick one charity. The amount is $10,000 to charge this year increases at the inflation rate, and it is a to be treated as a qualified charitable distribution. Another donation at age 70. So, and again, this is for their scenario one scenario to scenario three. Okay, that so that completes the, the input I have now defined the scenario. Now we can see we can see what the outputs are. Jim, is there a way for me to, there's a menu at the top is the zoom table at top is blocking my. I'm trying to get to like the yellow bar here but like a yellow bar around the screen. You may be able to click it in it may not be real visible but it may actually work. You can move some of those controls. Just grab it move it just get it yeah. Okay, thank you thank you thank you. Perfect. Okay, now we can see what we're doing. Okay, so now I saw I saw those are the input screens number I'm going to skip over analysis for the moment I'm going to show you the the some of the tabular projections produced by the tool. There are eight separate views customizable views you can define what go what these views are and what data goes into these views. But I've got them set up and so it's income contributions expenses and so forth over to summary. And then additionally, you can look at the details of the adjusted gross income and your itemized deductions. Let's just start over here with income. So you can see to. So these are the fixed rate analysis results all these are based on a the fixed rate returns that we define on the asset classes asset allocation pages. So the fixed income is, is, as you can see, it's here starts at 150 and drops down when he retires here in 2024 only worked a parcel year. So you can see it's starting to step down. Then he took that part time job or in $10,000 a year for several years. His wife earned $40,000 a year up to her retirement date. I think in May of 2024. And then Joe has a pension that kicks in on his retirement day here so he has a partial year partial partial year here and then in four years here thereafter. But remember I told you this is a this was a fixed a fixed pension it does not increase over time and we're currently looking at this data in terms of today's dollars. If you look into future year dollars you'll see it comes back to the $25,000. And then I think I also mentioned it has a 50% survivor option. So in his debt here at age 85 to he goes away. But now his wife is still going for several more years and this pension drops to to 50% of the $25,000. And then we switch back to today's dollars you can see social security kicks in here. And this is the portion of it is taxable based on the modified adjusted grocery or the taxable amount. Based on the AGI that determines how much of social security income is taxable. And that's presented to you here. This shows just a few contributions these are Joe's contributions his 401k contributions and these are the company this is Joe's company. Then here's a page here's a page that shows the expenses. These are the the this came off the expenses page, the I mean the net the property page. This came off the children's page. These are the, the, we initially had $50,000 in the 529 plan but that wasn't enough to fund the first kids education we had to kick in some more money so that's that contribution is here. These are the healthcare expenses we talked about it starts low with $3,000 year but then it goes up high and then comes back down again. So we get on to, onto Obamacare some there are some subsidies that are created you can see those are listed here, and they serve to reduce the healthcare expenses here. So this takes into account the application of that subsidy. We had a missile missile agents expenses to pay for those two weddings that's why these are. And then these are the specific discretionary expenses which included the increase spending for for the travel during the early retirement years a 10 year ban there I believe it drops back down for about 25,000. And then upon the death of the husband, it drops by 40% down for this level. And then then the final expense that we specified was the charitable charitable donations. They start off as a non QCD, part 870 but they they'd said they become qualified charitable donations. And basically these then come out of Joe's tax deferred accounts as R&Ds but they're not taxable account toward R&D but they're not taxable. So that is the expenses page. Now here's a page that shows the detailed tax information I thought this still does detailed federal and state tax calculations. And these are some of the information associated with that. Here's the AGI column. And if you want if you see this you want to what the hell did that how to actually get it down what are the details you come over here. And there are the details, this state. There's the sum and here are all the components of it. And it's actually wider than this page you scroll over to see some more of it there. And these are the itemized deduction should you be able to analyze these are the details. Now we're going to go back. This attacks page again. These are the reportable capital gains. These are the deductions and exemptions. So, there's a GI minus this the federal taxable there's a state taxable these here's a federal income tax state income tax, which goes away by the way when this couple relocates from Maryland to Texas. So, we're going to go back to page 27 which we specified on the homepage. Well they're still working I got social security tax. That's this. And then the overall effective tax rate is shown in this column this is their marginal tax rate starts off at the 22% range drops down to 10% gets up into the 15% range when the R&B is kicking. And that is that now so here is a page that shows what are the what are the various accounts to it. We talked about those accounts initially there's a there's a 529 plan. There's cash there's cash there's a cash account as a regular investment accounts, both tax deferred accounts for husband while for all the accounts and inherited inherited IRA account the health savings account. And this is the total of these savings counts this is the equity in the property, and this is the total number which is net savings plus the equity in the property. And so the growth over time. You see these are the rates of return based on what we define over here on the financial assets, as the allocations page go over here we said these are real. Real rates return over here. These are the nominal rates return, which is basically the real return plus inflation. So you see they started 7% they dropped down to 6.1. And that's where they remain to the end. And then these are the actual growth amounts. These are in terms of today's dollars you want to look at in terms of future your dollars you click this button and you get that. Okay, what about withdrawals. One of the withdrawals we know we're going to have is we're going to be taking money out of that 5.9 plan favorite first kids college. And then our MDs are going to start they started at 72. And that begins to the ages shown here is the age of that of the of the husband at the beginning of the year, but we know his birthday was sometime during the year so that already so he reaches 72 sometime during this year and that's when his wife against two years later and those are their R&D. And even though Joe passes away at this point in time that that R&D continues and goes to his wife. And that's where it's at. But we do have a negative cash flow situation going to their unscheduled withdrawals from the regular investment account I believe we must have negative cash flow. And so yes indeed we do. So here's a summary page. This is a total of the income total expenses. This is the cash flow. It's positive while they're working when they reach their retirement age in 2024. And they get it, excuse me into a negative cash flow situation. And this is overall withdrawal rates. Total property, total property may have a loan for a while there's the property loan balance there's equity, again net savings the total net worth. So we're going back to withdrawals we do have a negative cash flow going therefore there's got to be withdrawals taken to cover that from somewhere. And because of the withdrawal priority that we specified back here, regular first, and then you're, and then the husband's tax deferred account. It starts taking those, covering those negative cash flows from the regular investment account and that's what these are. And finally, I think that the regular investment account runs out of money here. So now we've got to go somewhere else to get the to cover the negative cash flow in 2030. So in 2030 or 2031, we have to start taking from from Joe's tax deferred account and that's what these are. Okay, so that's the tabular projections. And one other thing if you don't like the way this is there's a lot of flexibility here. First of all, if you don't like the way this is organized you want to be organized in some other way. You can just take that click on that column as you want to move and go over here and move it to the left. Move it back to the right. Move it to the end put it wherever you want it. If you don't like the title that I've given it, you can delete that every color something else. I have to try to remember how to do it you click add header come down here. So you have flexibility you can you can you can change these things any order you want you can change these headers and span those columns. Additionally, I told you you can define these eight views however you want them to be you do that from this tabular projections major page you come over to the view management subpage. And then here are all the columns of data that are available I think there's 130 some columns of data. So it's far more than one page wise you do have to scroll to see a lot. But here are the age, the eight views, you can define call them whatever you want to call them you don't want to call any time you type in something changes to whatever you want to call it. And then you check which you just put checks these are the columns of data I want to include on that page. You just go through you check whichever box whichever columns you want. And they will appear on that page. This this row right here tells you whether there's actually data. So you can see, if it has a no I didn't check it for the most part. So you can just go through there and pick whichever views you want. So that's that I won't dwell on any more unless there's a question but then I'm going to so now I'm going to move to the graphical projections I said it this thing produces the outputs in terms of graph. Here's a graphical view of the savings and network. There's quite a bit of data on here. The, the, the bar chart portion of this thing is or the savings related things and either these are stacked bar charts. So the top is the overall net worth. And so at the top the top segment there is the total equity and property, the bars beneath that are the various components of your savings. And then the line graph is income, the blue line is income and this line is the expenses and they are calibrated against the scale on the right bars are calibrated against the scale on the left. And you can show this in terms of today's dollars or future dollars. Okay, well all that said. Okay, one other thing one of these reports, the tool is designed to be an interactive tool, you make your input you see the outputs and you can flip back and forth you can see all the, all the outputs. But if you want to produce it produce or report a PDF you can produce a PDF file from this page. And you can arrange that in the landscape orientation or portrait orientation if you create an input report an output report I'm not going to do it, but it generates a PDF file, and you can print it, share it with someone else whatever you want. Okay, well all that said now let's do some analysis. So, based on all these inputs. How's this couple going to fare. So I'm going to show off by doing I'm going to start by doing a Monte Carlo analysis on scenario one. And to do that, you do you select this but the analysis type that I'm going to do is showing red right now. It's Monte Carlo is selected. You want to do historical you click that see it changes to read. I'm going to go back to Monte Carlo and click update the active analysis is going to take several seconds. It's going to do that analysis. There it is. And so there are, there's two primary things shown here, the red line sneaking through the middle there is the fixed rate analysis, based on average rates of return of each account. And then the blue bands are the Monte Carlo analysis. The product goal does uses 500 different test cases, and it's Monte Carlo analysis and the blue bands are trying to show you the distribution of those results across all 500 test cases. And they're arranged by percentile, there are, there's, and they're in their 10% bands, the lowest, the lowest band is not shown, and neither is the highest band. So, the first band down at the bottom is the is they are the results that show up in the 10th to the 20th percentile. This is the 20th through the 30th and so on up to this is the 80th through the 90th percentile. And the first one is to show you what the percentile range we're talking about. So you can see, based on the standard distance, the standard deviation that I specified earlier, we get quite a bit of a range in these results over time. But, in this particular case, 98% success rate at the end of their life. So I'd say that's that's pretty good. Stuart, this is Jim I have a question. Yes, I noticed when you set up the original assets you put the stock market I think at 5% with the 20% standard deviation. That's reflected here right that's what you're some of what you're seeing here. My question is, is I'm not used to thinking about it within the standard deviation world is that typical or what would you say about the way you set this up with the five and 20. The Monte Carlo analysis is based on using random rates return. I mean, what it's trying to do is simulate market volatility. And it does that by using random rates of return using a normal distribution and to do that, it needs to generate random numbers. Random numbers are based on two things. One is the mean, the mean, which we define over here. Yeah, I guess my question is more. How would you describe a 5% return 20% standard deviation is that like the 80s or is it like the market is now or. Oh, how would you give people a feel for how you put that input in. Well, I'll tell you, I'm going to give you tips from Bogo hedge. You see this link right there. I didn't mean to. Oh, well, I'm sorry. I'm sharing my screen that's going to miss me a big time. Oh, well, here it is. Did everybody see that. Yeah, I saw it. I mean, are you are you seeing are you still seeing the spreadsheet or are you seeing the logo his website. We're actually seeing the spreadsheet. Oh, it could be that you asked you told it to share the Excel application, but you can also share your screen. Like, yeah, I'll just see. Actually, I can I've got a question I posted in the chat but are there defaults for most people that aren't familiar with the recommended standard deviations are current thinking are there defaults built in that we can use. Absolutely. And so that's right here. I'm just going I'm going to click it I don't know that I'm going to I'm going to click and see what it does. But yeah, those those are the defaults. So I just click the load the defaults. What it did was load these three asset classes, and he used this, this rate of return in this standard deviation. And so that the tips and the bogey heads there. I thought that was a that's a that's a pretty good article on the website there that provides it provides historical rates of return for various asset classes stocks and bonds, and what the standard deviations have been. And also, there's other pieces on that on that on that web page that show what they predicted someone predicts is going to be in the future. I think John Bogle is one of the people who contributed to that at one point time I think his inputs were there. That's the last time I looked at it. He's the if you click the link it takes you to the wiki the historical and expected returns page on the wiki. Okay, Bob if you want to share your screen you could show it. Okay. Yeah, it might be easier. Let me get mine on full screen now. Should I stop sharing. Yeah, go ahead and stop you can restart after we're done here. Okay, there we go. I see there's a comment in the chat window that. Joel uses 6% nominal with a 20% standard deviation. There's also somebody asking as to whether there's a silver addition available in between the bronze and gold. No, there is not. There was one. So can you all see my screen now. I'm still seeing the asset class screen. We're seeing Bob you're sharing that. So yeah, if you click on the tips from boggleheads. It takes you there, which has. Am I seeing what I'm looking at. Yes, very helpful. Yeah, that's all I just wanted to illustrate what was happening. I'm not sharing it. We're back to me now. Yeah, go ahead. Thank you. Okay, sure. So Jim, does it get your question answered? Yes, I'm going to dig into that page that you guys said and then try to understand the feel for it. I do a lot of statistical things, but I never really looked at it in the market. Okay. So you can see there's a little bit of a yellow line showing up back there. That's because we did. I think that's probably because I clicked that load the defaults and it changed the rates return just a little bit. So I'm going to, I'm going to update the analysis. And it's okay. And so that's a Monte Carlo analysis. And I get the last the success rate over the last 10 years of the modeling period up to the death of the wife is shown here. It's nearly 100%. You can also show expense as a title is total savings and total spend you can show expenses here as well. And it shows up. It's calibrated against the scale on the right. And this is gray band here, where the dash line is the is the expenses with the fixed rate. Fix rate return expenses. And the great band around that is the Monte Carlo analysis. So, as you earn more in the, if you're doing well in your, in your Monte Carlo analysis, you're going to your counselor going to earn more. You're going to be paying more taxes and that's probably what causes the certain amount of width in that band of expenses there. But it's built in the ability to hide it, because it lays on top of that, the blue bands and sometimes it can be very wide and almost cover up the blue bands. So therefore, I generally run with it hidden. We want to look at historical results. I'll click it and then I'll describe how it works. Okay, there's a results using historical analysis. When I was, so this is using historical data, and I needed to show you where that is defined on the financial assets historical data. And here's. So this has historical data built into it in as this and be returns based from Robert Schiller go way back to 1871. And there's information from, let's say the Stern School of Business as Treasury bills and Treasury bonds data going back to 1928. And that's, and so that's what these are. These are the historic returns that I just described, Schiller returns, these are the Sterns returns. And if you, you have your own data that you can use that you want to define for your asset classes, you can do that with these for these extra columns over here. But for this example, we're using this the history data that I got from Schiller and Sterns. So the way that the historic analysis works is this is, it just runs through these sequences one after another. Let's let's say that just to make it simple let's say I have 50 I have. Let's say I have 100 years worth of history data in a life span that I'm going to model is 50 years. So the first test case I do is to do 50 years of history beginning with the 1928 data and go 50 years so that's that's test case one is a 1928 through 1978 data. And then for test case two, I'll start with 1929 and go through 1979 test case three starts with 1930 through 1980 and so on, until we until we can't go any further without running out of data. So, if I have a, if I have 100 years of history data in a 50 year lifespan, that means I can get about 50 years worth of, I can get 50 test cases. So that's, so that's fundamentally what this thing is doing. Historical analysis, it uses the history data that's available. And you, and based on the lifespan of the people we're modeling, it will do as many test cases as it can, and then it will present the distribution of results by percentile using these blue bands like you see here. And in this case, the success rate is much lower at only 79%. So that is the fundamental analysis. Let me see what I want to do, hit on a few other things. We have a question I can throw in here. Could you describe some of the major differences in the bronze and gold and maybe of the things you've covered so far and what you would see in bronze versus gold. Yeah, sure, sure, sure. Bronze is is it's a pretty high fidelity calculator as well. But it does not do detailed tax calculations. And it doesn't. It basically specify income stream by the starts here it ends here here's the income. Here's how much it is. This is how much it inflates per year. And that's how you define the expenses is basically the same way. It doesn't get into these detailed new launched expenses such as how to model property mortgages, health care and college educations. All that you just list the expenses, when they start when the end are they fixed expenses to the inflate with inflation change with inflation. And you specify the tax rate that you expect to use the effective tax rate. And that's what it does it. But it does generate our MDs, you don't you don't have to specify what are the it knows how to calculate our MDs. It, you know, it does do Monte Carlo analysis, though it's much simpler it's much simpler runs much quicker than this one. It does not do the historical analysis does present the data in tabular form as well as in graphical form. But it's a much, much simpler calculator. Much easier to use. Both of these have a user manual that goes with the bronze manual 20 or 30 pages. The go manual is 180 pages. So, you know, I just wanted to go to Ralph optimizations bronze will not go will does detailed modeling of your social security, it will it will tell you the optimum age to start your social security as well as when they want to do that. So that's an overview. Is that generally cover what you wanted to hear. Yes, very good. There are a few questions I could ask now someone said they opened up the bronze version put Joe's age at 42 and they got a circular reference on Excel. I don't want to do the labor that one but just that I mentioned it. Okay. Okay, I think I'm going to guess why I know what it is. The one of the things that the bronze calculator does is it does iterative calculations on taxes. Gold does not. And if you do not have it set up to run. It's possible you got you have another Excel file that has come up and is taking Excel out of the iterative calculation mode you will get a certain calculation there every time. And it does basically it if you do it if Excel does iterative calculations. It has circular references. But but if it's in, if it's in the iterative mode, it will be able iterate until it resolves the answer. So that's how we do so we calculate the circular references are not a problem. Until you turn off iterative calculations. So view. All right. Pardon me. Thank you. Okay. Second question. Second question. You may have covered it I may have missed it but could you describe anything about health care premium tax credits or subsidies. Yes, yes, yes. I Let me go back to that. Quickly. I think for the premium tax credits and subsidies are synonymous. And so the subsidy depends on on a few things, one of which is this this benchmark cost of the, the, the silver plan cost that I don't know if I can put with the term it's the second lowest cost silver plan in your geographical area. And so that's a that that is taken into account. Also your modified adjusted gross income you have to got to be between one times and four times the federal poverty level to qualify for a subsidy. If you do qualify, then the tool will calculate your, your subsidy based on this number here, and your modified adjusted gross income so the, the Obamacare algorithm determines how much you're expected to pay for your insurance based on your Your magic. And so the tool does that behind the scenes here. Yeah, thank you. I must have stepped I had to take care of a personal problem I must have just missed. Okay, so does that answer for you. Yes. Okay. Do you anticipate making some changes for this. There's just recently they passed some law last Thursday with. Yes. Okay, could you speak to that familiarize myself with what a change. Okay, thank you. We have some questions about Roth conversion optimization if you could demonstrate that or speak to it. Yes, I was going to go I was going to get to that. I was going to use a different, a different example. I did a Roth conversion on this particular example, but it was not very basic. It's not very, it's not very effective to do a Roth conversion. Let me let me show you real quick. You do that's what falls under analysis. And there are some sub sub pages here plan Roth conversions is one of them. And again, it's oriented scenario one scenario to scenario three for both husband and why I need to get this thing out of the way again. So the, the, the input fields over here or for the, for the husband, these over here for the wife. Basically, you can, you can, you can either say we're not going to do conversions. We're going to do, I'm going to click this but you can do fixed duration conversions where basically, this goes, you can start. There's three different options. I'm not going to do any we're going to do a fixed duration conversion, or we're going to do a tax bracket up tax bracket restricted conversion. So for this for this right here we're going to fix duration is going to start in a particular year. We're going to do this percentage of the tax deferred account. We're going to do it over a period of this many years. And that's what we're going to do. Meanwhile, you can do the wife and either do them or not do them also. If you both fix fixed duration use, but she can say independently of the husband. This is when she's going to start this is how what percentage of her account we're going to convert over so many years three years whatever however many years you want to pick you. That's how you do it. If you do. Incidentally, you can see we just I just did that and it changed it and it said okay that made $126 different over the long term. Not much different. So now let's look at tax bracket restricted. The only thing that changed here is the how many years you want to do it over there's no longer a factor. It'll do is it'll do as quickly as it can, given the how much he can put in the. How much you can do given the limit of the tax bracket that you specify. Now we're here. We said this is a max tax bracket I want to use I do not want to get out of the 22% tax bracket while we're still under TCGA. If we once we get beyond that out 2026 the 22% bracket is going to go away it's going to be replaced with a 25% bracket. And you'll see the options are here. I have two different values, but basically there are seven, there's seven brackets that the tool. And depending on which tax law we're under is either 24% or 28% 32% 33% and so on. So you can. So in this case, we've, we've said we're going to do 50% of the account starting in that year, with a limit of this 22% or 25% bracket you can see the red line indicates the results of the projection, the fixed rate projection over time. It's worse initially but it slowly gains ground because you're paying out here you begin to pay less tax because you've got money out of the out of the or out of the tax deferred account. And the RMDs are lower therefore the taxes are lower so the Roth starts with gaining ground and ultimately though it doesn't quite get that. That's how that can be done, and then you can finally optimize it and I'll listen in I'm going to just do that and we'll see what it does when when you do optimize. It does a husband and wife together. It uses uses the tax bracket restricted method and tries to figure out what percentage of the count gives the best result in which tax break it gives the best result. And that's the best that here. In this case, it's saying converting 25% of the count is best staying under the 10% bracket is best. It basically basically makes no difference. It's only $2,800 difference over the long term. However, that's using absolute dollars. What we have one thing we do know is that money in a wealth account is worth more than money is a tax deferred account. So the tool will recalculate will recalculate based on the average marginal rate over over your lifetime and it will decide how what are the effective number of dollars involved in this case, the wealth conversion looks a little bit better but it's a very impressive $16,000 better long term. So anyway, this is not a very dramatic example I do have a different one that I can use that. Let me go, let me go just do that. Let me go just do let me check with Margaret asked that question originally Margaret does that answer your question or do you have any detailed rock conversion question. I'd like to see the other case where you've got a higher amounts in the tax deferred. If you have something along those lines. Yes, ma'am I do. So let me let me leave I'm going to go, I'm going to go back to the homepage. I'm going to go to this, this sub page called simplified inputs. So this is what you might use if you just kind of, I just brought up this really complicated tool I really don't want to read 100 page manual today. I want to put in some basic things like I might have a really simple calculator, and I just want to get started I want to kind of see how it goes so it's going to use for this example. So again, just 3%, 3% inflation, $2 million in a tax deferred account. And in a couple it's, it's already basically retired. So I'm going to, I'm going to go ahead and tell it to go ahead and populate the tool with these simple inputs. And it's, are you sure you want to do it? Yes, I want to do this. So right now, it's populated those pages we already looked at with this simple data. It's eliminated everything I put in before, put in the case it says it's done. Now we're going to go do the homepage and just take a quick look. So here's the initial balances now we've got the $2 million in tax deferred, $500K in regular. And now let's go back over here. And let's start just by running an analysis. Let's see, you know with no Roth conversions, let's see what this looks like real quickly. Okay, that's a historical analysis. I'm going to switch and do Monte Carlo. Okay. Now let's go do a Roth conversion. All I got to do is come here and click optimize. The first thing it does is it doesn't really know what you've already done in Monte Carlo analysis to compare to. So he's going to do that first. He did. Now it's working on the optimization of the Roth conversion. He's saying here's Roth optimization does yield better results and not doing it. And get that out of the way in terms of it's quite a bit better this time. That's still in terms of the effective dollars just look in terms of absolute dollars. So this is just count all dollars and a dollar in tax deferred is just as good as a dollar in in Roth in this particular graph. You can see so the blue line is the baseline red line is the what if line we actually do this Roth conversion. That's what it's going to look like. So you can see there's a crossover point out there in 2043 or so all of a sudden now from that point forward the world is better. It falls behind initially because we got the big tax bill to pay as we do the conversions. But now we're gaining ground because we have less taxes to pay because of the lower R&Ds. So it goes on gains and keeps on gaining from there on out. And one thing I have to point out here is that I think the key is that the. We got it we have to have to get apples and apples we got the same rate of return across all of these accounts. You could make this example look really bad if you had a great rate of return on a tax deferred but a poor rate of return on the Roth account. In this case, we're talking apples and apples. So you can see that. Over time the Roth account gets ahead, but if we look in terms of effective dollars, it's ahead from the get go and stays ahead by the amount of 400 and then ultimately ends $400,000. So is that a better example. Yeah, that's much better. So, do you then produce some kind of a year by year chart that will show how much is being converted each year and what tax brackets it's optimizing on. Yes, as under the tabular projections. Let's go back to get this thing out of the way again with roles. This is the amount every year in today's dollars. There's the amount in future year dollars. See us look at the taxes. Let's see it said, let me refresh my memory here is that the 12 to 15% 12 or 15% bracket. And you can see and that is what it is. And out here and out here is it's actually use up every dollar in that bracket in those brackets. And so, the amount of taxes. So, you know, the federal income tax that let's, I'm going to have to do what I want to bring those Excel menu back to the top and I want to use it to add these numbers for So with the roles conversions. Going on the taxes page $417,000. But we come back over here. And turn off those conversions and go back. Now we're paying $768,000 in federal income tax. So that's why the roles conversion is advantageous reduces those taxes substantially. And so here is what the accounts are doing. The tax deferred account begins. Excuse me, I got to go back and turn that on again. Okay, we're back to that. And so we start off with $2 million in the tax deferred account. And, and then but the, the, the, the role of the count is coming up here. It's getting bigger and bigger. And if you want to do you could put these on the same page. I don't currently have them on the same page, but you can get them on the same page with this view man. I'm going to, I'm just going to demonstrate that for you right quick. I think I'll put on the accounts page. I'm going to come over here. I'm going to find that. Those wrong. Let's see if I can find it. Here it is. So I've added that to the accounts page. Go back to it. And here are those roles conversions here. As you can see it messed up the headers. So anytime you add data, you have to redo the headers. For now just delete them. But if I want to put this so you can see, there's there's the tax deferred account. There's the Roth account. Here are the Roth conversions. I'm going to move a little bit over there where I can see it. Let's put, let's just put all these together. So there you go. There's the tax deferred account going down. Roth accounts going up and these are the conversion amount. Okay. Any other questions? Anything else in that regard? Joel had a couple of follow-up questions. Joel, do you want to. Explain your questions? Sure. Can you hear me? Yes. Great. So I, I kind of built my own Roth conversion. Engine. And what I found was sort of a mixture of things worked best in my case. So I'm, I started retired at 58. I started with a higher tax bracket and not worry about Irma. But after Irma hits, then I kind of went. And said, okay, for the next 10 years, I want to convert to 22%. But for the first five years, I want to convert for 24%. And so I wanted to be able to mix and match a little bit more. Then what I saw in your demo. So I was wondering if my, is that capability there? Is that maybe a future enhancement? Partially. I'll show you what, let's go back because I skipped over that. It will let you specify an Irma limit. It won't let you pick a different marginal tax bracket. It will go with one or the other. I mean, it would go with only one. You cannot change that. So yes, maybe a future enhancement for now. It's only one. However, it does let you specify the maximum Irma bracket. If you choose to, right now it says there's no limit. But if you, if you want to limit it in there, so that it, so that wealth conversions don't drive your, your Medicare costs up, you can do that. Right. Okay. Partially does what you would ask, I think. Okay. Yeah, I mean, this is a Roth conversions are really tricky. Tricky thing. One thing I failed to mention is that they, they always respect to the ACA subsidies as well. A Roth conversion will never cost you a subsidy. So it will take it right up to the limit, but it won't take you that $1 over. So since you lose that Obamacare subsidy, it'll do everything you can to get right up to the edge. And you, you're no longer. Illusual for, for the ACA, we asked for where you go on Medicare, for example, then it'll go at each of their wealth. Okay. And then sort of the second follow up was. On equities. And the. The IRA would certainly be mostly bonds. It would certainly be a difference in rate of return. Expected between the two. Assuming you guys are doing. Sort of a boggle head. Tax. Advantage. Tax aware analysis. It seems like that would be a good thing to assume is. Roth would have a higher rate of return than your IRA. Or am I not thinking about that correctly? I'm an engineer. Not an advisor. So I basically don't go there, but you can definitely do that. If that's what you think is right, you can most assuredly do it. I did it this way. I just said it's kept a level playing field. Just so we could just. Just so we could just see what the. Absolutely. So there's a, yeah, there's another tool IRRP where we have to do. That level playing field. Otherwise. The analysis kind of goes wonky. When you try to optimize. And I was just curious that. You know, if you. Kind of kept it true where Roth would have a higher rate of return. Would, how would that change your optimization then? Well, yeah. It would use it higher rate of return. It would just go. I mean, it would. The optimization will take that into account. So does it. So what we see an IRRP is it. It really jacks up the Roth conversions. Quite a bit above what. Would seem to be practical. Because it's chasing that extra return. As part of the optimization. Yeah. And so I think it might, it might be interesting to sort of, if you could quickly. Demo or talk to it, how it would. Handle that. Let me do it. Let's just say we're going to go a hundred percent. Stocks. 0% bonds. Yeah. Let's see. Okay. This was my sale. I gotta go over here and make a quick change. We'll say what did we say? 5% stocks. Real return. 5% stocks. Yeah. Bonds that good. Sure. Good enough. Okay. So that gives us an overall. Real rate return on the Roth account of 5%. Yeah. Yeah. Versus three and a half percent on tax deferred. Right. Fair enough. Okay. Now let's go see what we can do. Let me just interrupt you for a second. Norman, are you saying you're, you're going to be starting in about. What, 18 minutes. Yes. Okay. We'll be done in eight. We'll make. Yeah. We have a shared account here, which we're using. So we're going to wrap this up at 18 minutes because the first thing we're going to do is we're going to, you know, we're going to have a meeting on real estate and in fact, if Norman, if you want to put the link out there, if anybody else wants to join into that one, but I'm going to let Stuart follow up here. And then I wouldn't mind if Bob, if you would talk about how you use the tool, because you helped orchestrate this whole meeting. After Stuart finishes the, the Roth stuff. Sure. Okay. So. Yeah. The reference is huge. That was a five and a half million dollar advantage in terms of effective dollars. Or almost almost five and a half million dollars in absolute dollars. When you're getting a better rate of return on the Roth account. And did that, how did that change? What targets it picked for the optimization. Okay. So it really jumped up the tax bracket and the amount that it converted. Yes. Interesting. What it does, it just simply runs through all of the possibilities. And then it looks and says which one is best. And presents it. Got it. And then if you leave this page like this, that's what the model is going to look like. And all the other, if anybody else you go, this is, this is it. So if you did, if you just want to play with it, didn't want to leave it there, then you got to go back and take it out of this mode. So. Just rotate between these three options. Okay. Is there anything other questions or shall I show you some of the questions? Okay. Is there anything other questions or shall I show you just a couple more things? Or how about Bob, you take a minute and explain your situation in life and why you like the tool. Sure. What features you use. Shall I stop sharing? You know, you can just leave that up. I'll just talk for a second. Right. I had initially planned. When I purchased the tool last in the last year to retire in June of this year and decided not to, but this is a good thing that happened to work. But I wanted, my wife is already retired and I wanted to have confidence that we were making the, you know, I was under the impression from other tools that we were financially independent, but I liked some of the videos that I watched about Perlana Gold. And I think I've mentioned in the last meeting that can I retire now? Darren Kirkpatrick is a big fan. He's done reviews of all a number of different retirement calculators. And he is a huge fan of Perlana. And I wanted to ask Stuart, where did the name come from? Perlana? Yeah. What is Perlana? Does that have a meaning or? Yeah. It's my great grandmother's given name. I was doing some genealogy work and I was spending a lot of time dealing with her. When I started this business and I said, I need a name. Well, you did. Well, you know, I've used it because, well, I modeled all our different income streams. I have a pension. My wife will have a pension. I haven't taken mine yet, so I'm going to change that motion in the next meeting. And I'm happy for that. But the tax effects of those things, social security. We're, we own have bought property where we planned to build a house. I modeled that, know, a lot of some things that Stuart didn't show. And he modeled some things that my kids are out of college. So 529 plans aren't relevant to me. I have health insurance through my. Retirement system. especially this page we're looking at now, this is something I was really concerned about because a lot of our, the vast majority of my assets are in our two tax deferred accounts, my 401, 403B and my wife's 401K. So this gave me doing the various scenarios and just playing with what is more confidence. I mean, I had used IORP and FireCalc and some of the other free tools. And there's, you know, the one that's available through the bottle head site, which retirement- I think it's a retiree portfolio model or something. Yeah, I retiree portfolio model. I've used all of them. They all have some, just like anything, have advantages, disadvantages, but I really liked and still continue to like Prolan. And I think I told this story last time that I started using it and I ran across an issue where it looked like my state tax for my pension wasn't being calculated right. I fired off an email and within an hour, I think Stuart answered it himself, telling me, you know, basically he answered the question, but he said it was in the manual very politely. And then from that point on, I started reading the manual, which has got, I mean, who writes 180 page manual anymore? But if you wanna know something about how the tool works, it's in the manual. And so I've made a point of reading the manual a lot more, but I think I've said enough. Okay, one thing, a question came up and I think we should end this meeting in about six minutes. That'll give the San Francisco group about five minutes before. Sorry to push against that. They've also included the Zoom link in the chat. So if anybody's interested in that, but the question that was two questions for Stuart, one, could you explain how the purchase licensing ongoing changes works in the future? Yes, it's done on an annual basis. Dave, you buy the tool, I set it for $99. It's been $99 for years. I don't really anticipate changing that. And then it's always developed and released on a calendar year basis. So 2020, 2021 was released in early January, as early as I can. And then I make updates throughout the year. If I need to be byclining bugs, I fix them. I fix them as quickly as I possibly can. I put that on the version. If you're on the 2020, that year's license, you get all the updates for free, of course. And then I charge, I give a 50% discount to upgrade from one year to the next. So if you've got a license for 2021, you can upgrade to the 2022 model for $49. And as long as you keep up every year, it'll be $49. And then you get the new model and all the updates that come along with it. And I generally do not put out enhancements during the year. I just fix problems that I discover or that someone discovers and brings to my attention. I fix them. And the tool is quite complex. There's a lot of data introduced. It has the ability to export your data from one copy and import it into another copy. So it's relatively easy. It's not nothing, but it's relatively easy. Download the new model, import the data that you exported out of the previous one. And it's in it compared to the way it used to be. Those imports and exports run really quickly. Okay, thank you. They take several seconds. Can you spend four minutes and talk about the study sensitivities and optimization tabs? Oh yeah. I'll tell you what, so I like to go back to, I'm gonna go back and what I just talked about, import, I'm gonna import the file and get back to where we started from. You're gonna see exactly how long it takes to do an import. That's what I'm doing right now. Okay, that's it. It's done. I'm gonna quickly go over here. I'm gonna do rerun the analysis real quickly. Okay, I'm gonna go to optimization. What I'm gonna do, run before you optimize social security start ages. And this is not to say, this is the, it's not gonna give you the ages where you, this is not gonna give you the age of which you earn the most money. It's gonna be the ages that result in the greatest savings at the end of your life. And so it's presented in this matrix. And the best answer is this dark green box in this matrix. When Joe is 68 and Jane's start age is 65, that yields the greatest savings at the end of the modeling period. And, but these lighter green squares indicate choices that are almost as good. In this case, they're 99% as good. If you say, what about the ones that are 98% as good? Let's look at that. Okay, there's a bunch more to pick from. Okay, so that's one. Now let's look at study sensitivities. It's this page here. So here is the fixed rate returns that was established when I ran in analysis this while ago. And so now we can, we can do some what is. It lets you look at the effect of changes in the key parameters in the model and the key parameters in question are the ones that are listed down here. And so let's look at, so here when I ran the analysis, it saved the setting of each of those parameters in that gray row right there. And so if I want to change those, I just click this up or down button here. So if I want to change inflation from free, raise it up, there's 3.1. And you can see that I did have an effect at the end of the model is made a $10,000 difference. I keep clicking it and you can see it's getting worse. Now let's go back, let's revert back to where we started from. What about if I earn more money on my regular savings? I'm clicking it up at just a 10th of a percent but across the whole span of the model. You can see what that's doing. What about if I don't earn as much on the Roth? Well, let's see. Well, right now I don't have a Roth conversion in so much click this won't have any effect. What about Joe's retirement age? He's planning to retire in 2024. What do we add some to it? Like, whoa, that makes a difference. If it works another year, it adds quite a bit of difference only at the end. Okay, but what about social security? I've got over here, I just said that the optimum answer is 68 for Joe and 65 for Jen. Let's see if this agrees.