Bogleheads® Chapter Series – NewRetirement Planning Tool
00:00:00.000 | (upbeat music)
00:00:02.580 | - Welcome to episode number three
00:00:10.300 | of the Bogleheads Life Stages Podcast.
00:00:13.040 | Bogleheads are investors who follow
00:00:14.600 | John Bogle's investing philosophy
00:00:16.580 | for attaining financial independence.
00:00:19.040 | Today's episode features Michelle Dash
00:00:21.040 | and Steven Chen from New Retirement.
00:00:23.680 | This recording was made on April 7th, 2021.
00:00:27.580 | (upbeat music)
00:00:30.300 | This recording is for educational purposes only
00:00:33.020 | and should not be construed as investment advice.
00:00:35.940 | - So tonight we're gonna go through
00:00:46.820 | a demo of New Retirement.
00:00:49.820 | And let's see, I have Steven Chen with me,
00:00:54.340 | the founder of New Retirement.
00:00:56.900 | Give it away, Steve.
00:00:58.660 | And he's just giving us a little introduction
00:01:03.660 | of how New Retirement started
00:01:07.000 | and a little bit about the tool and where we're going.
00:01:09.540 | And then he'll turn things over to me
00:01:11.380 | and I have a couple of screens up on my end
00:01:14.980 | and I will walk you through a live version of the demo.
00:01:17.740 | - Okay, awesome.
00:01:20.380 | Hey, everyone, appreciate your time and attention.
00:01:22.980 | I'll try to keep this really short
00:01:24.260 | 'cause I know we're here to talk about the product
00:01:26.180 | and we welcome all feedback.
00:01:27.980 | So yeah, I'm the founder.
00:01:30.460 | Basically, this got started because I was trying
00:01:32.340 | to help my mom with her own retirement situation.
00:01:34.820 | She came to my brother and I when she was in her early 60s
00:01:37.780 | and needed to borrow some money.
00:01:39.500 | And we looked around to try and get her advice
00:01:42.180 | and help from a financial advisor,
00:01:43.500 | but couldn't really find anyone
00:01:44.540 | that focused on decumulation
00:01:46.580 | or was interested in her situation
00:01:50.260 | 'cause her net worth was maybe $250,000,
00:01:54.040 | including her home, which was more than half of it.
00:01:57.460 | So we ended up doing it ourselves on spreadsheets
00:01:59.540 | and then a lot of it was expense management
00:02:01.620 | and looking at her whole life holistically.
00:02:03.980 | So healthcare, social security,
00:02:06.620 | we ended up helping her downsize
00:02:09.940 | and freeing up a lot of home equity
00:02:12.260 | and then helping her think through investing that
00:02:14.220 | and should she annuitize and stuff, questions like that.
00:02:16.980 | So we felt like, hey,
00:02:19.260 | there's probably a really big need here
00:02:21.420 | given the size of the populations,
00:02:22.940 | 120 million people over age 50 in this country.
00:02:25.360 | And so we kind of set about building in
00:02:27.860 | and it started out as a kind of a side project
00:02:29.660 | and then now has become kind of a full blown big effort.
00:02:33.460 | I mean, we have 22 people,
00:02:35.180 | so we're still relatively small company,
00:02:37.140 | but solely focused on building this platform
00:02:39.680 | and helping people think through decumulation
00:02:42.620 | and give them a central free or low cost way
00:02:45.820 | to manage themselves.
00:02:47.300 | So that's kind of how it got started.
00:02:51.660 | Really the way we think about this
00:02:53.220 | is we're building a platform.
00:02:56.340 | So it's not just a tool,
00:02:57.580 | but it's really a way to enable an ecosystem.
00:03:02.580 | So we have the tool,
00:03:05.220 | we also have a community around it,
00:03:06.460 | we have a bunch of educational content around it.
00:03:08.900 | In the future, we do wanna enable people
00:03:12.580 | to be able to find curated experts that can help them,
00:03:17.140 | but in a completely transparent way.
00:03:19.140 | So we are paid by our customers and no one else.
00:03:23.180 | So people can pay us through subscribing
00:03:26.420 | or they can hire us to coach them up
00:03:29.020 | or we provide a CFP advice,
00:03:32.020 | but on a flat fee basis,
00:03:34.100 | like a coaching session is like 150 bucks an hour
00:03:36.980 | or 45 minutes.
00:03:38.540 | We'll do a flat fee plan review for a thousand bucks.
00:03:41.540 | That's it.
00:03:42.380 | There's no AUM or anything else wrapped up in this.
00:03:45.940 | But because it's software,
00:03:47.220 | it enables us to go through partners
00:03:50.860 | at a very low cost in a very low cost way.
00:03:52.620 | So we're talking to employers and media companies
00:03:54.620 | and there's some stuff coming down the pipe that way.
00:03:57.260 | A little bit about where we're going.
00:03:59.980 | So today it's really like,
00:04:01.180 | you can think of it as like a TurboTax for planning.
00:04:03.740 | So it's like, you just do it all yourself.
00:04:05.500 | You pull the knobs and levers
00:04:07.060 | and you can see what's coming
00:04:08.420 | and how your plan might change.
00:04:10.660 | And then where we're going is,
00:04:13.220 | we're looking at the data at an aggregate level
00:04:15.660 | and like what's working to achieve better outcomes
00:04:17.900 | for our partners or sorry, for our users.
00:04:20.340 | And then we're surfacing things
00:04:22.580 | that are relevant for them.
00:04:23.940 | So for example,
00:04:25.960 | we're about to roll out social security optimization
00:04:28.520 | that will run 12,000 simulations for an end user
00:04:31.900 | to say, hey, we looked at your plan,
00:04:33.780 | all of your income, expenses, taxes,
00:04:38.260 | future withdrawals, conversions, Roth conversions,
00:04:41.020 | stuff like that.
00:04:41.860 | And here's how you might be able to get more money
00:04:44.280 | from social security.
00:04:45.400 | So we can do that.
00:04:48.020 | Users can initiate that.
00:04:49.180 | What we can also do is run it automatically
00:04:51.740 | behind the scenes for 145,000 people on surface.
00:04:55.400 | Like, hey, it looks like there's an opportunity for you,
00:04:58.940 | Michelle, to do this and point it out for them proactively.
00:05:02.340 | So we are going to automate Roth conversions,
00:05:06.020 | which you'll see demonstrated in here,
00:05:07.260 | but we can do that.
00:05:08.340 | Social security optimizations.
00:05:09.700 | I mean, essentially anything around planning,
00:05:13.020 | we'll be able to proactively do for you in advance
00:05:16.840 | and at least won't do it, but like surface, like,
00:05:19.200 | hey, there might be an opportunity here
00:05:21.600 | that you haven't thought about.
00:05:22.440 | So that's like a little bit about how we think
00:05:23.880 | a little bit differently about this.
00:05:25.600 | And we are sucking in lots of data behind the scenes
00:05:28.580 | if people decide to opt in for that,
00:05:30.120 | if you decide to link accounts.
00:05:31.680 | And yeah, if you want to go back one slide just real quick,
00:05:37.160 | and then I'll be quiet.
00:05:39.000 | Basically, completely independent platform,
00:05:41.880 | consumer focused, you know,
00:05:44.180 | we have this platform technology first approach.
00:05:46.900 | And that's, I think, you know,
00:05:48.300 | kind of what differentiates us from other companies.
00:05:52.180 | Anyway, sorry if this was too salesy,
00:05:53.420 | but I just want to give you the quick overview.
00:05:55.660 | I'll turn it back to Michelle.
00:05:57.160 | - Okay, so there's a few more slides.
00:06:02.160 | I just want to walk you through kind of the key stats
00:06:04.700 | of like what we do.
00:06:06.300 | As Steve mentioned, you know,
00:06:07.740 | the way we get paid is by consumers,
00:06:09.900 | and that really helps us stay unbiased.
00:06:13.120 | We have different levels of the program.
00:06:15.640 | There's a free version, it's always free.
00:06:18.220 | You know, it's really meant for people
00:06:19.880 | who want to see if they're on track.
00:06:22.440 | It has limited functionality in terms of assumptions
00:06:25.640 | and some of the more advanced tools and charting
00:06:29.400 | that Steve was mentioning.
00:06:31.320 | The Planner Plus option is about 100 bucks a month,
00:06:33.600 | a little bit less.
00:06:34.880 | And this is going to unlock all of the charts that we have,
00:06:38.080 | all the projections, lots of suggestions,
00:06:41.300 | and everything that you see in the demo today.
00:06:44.300 | And then on top of that, we have Planner Plus Live,
00:06:47.260 | which is, you know, the Planner Plus service,
00:06:49.540 | as well as a couple of coaching sessions.
00:06:52.060 | And then we have the option for advisors.
00:06:53.940 | So we're really trying to, you know,
00:06:55.700 | provide something for everyone at every stage
00:06:58.940 | of their financial planning journey.
00:07:00.740 | When you come in the tool and we'll look at all this live,
00:07:05.300 | the first thing you do is you work on your plan.
00:07:08.060 | So you want to go in, you want to make sure that,
00:07:11.040 | you know, check the dashboard, see how you're doing,
00:07:13.720 | and then go back, refine your plan, add more detail,
00:07:16.800 | make it as accurate as possible.
00:07:19.260 | And then you can use our coach suggestions,
00:07:21.720 | which is like an automated rule engine
00:07:24.580 | to help figure out what's going on with your plan,
00:07:26.940 | where are there areas where you can improve,
00:07:28.880 | where there are areas that you can learn about strategies
00:07:31.880 | that you didn't know about.
00:07:33.440 | And if you have some inaccuracies in your plan
00:07:36.040 | or assumptions that are different than averages
00:07:40.200 | or historical averages,
00:07:42.920 | then we're just going to let you know.
00:07:44.820 | After you create a plan, then, you know,
00:07:51.000 | there's a lot of different places
00:07:52.580 | where you can find optimizations.
00:07:54.920 | So we just actually are, we launched today
00:07:58.160 | the Insights Library, which is just an overview
00:08:01.520 | of all the different charts that we have.
00:08:03.380 | So this is like the debut of that.
00:08:06.880 | And then Steve mentioned, we have a Roth Explorer,
00:08:10.420 | which kind of helps you figure out
00:08:13.020 | the optimal estate value,
00:08:18.260 | the optimal savings for your estate
00:08:20.940 | by doing Roth conversions earlier in your plan.
00:08:23.300 | We also have, like, what we really want to do
00:08:30.020 | is we want you to stress test your plan, right?
00:08:32.340 | So we're giving you a platform to create a plan,
00:08:34.780 | but we don't want you to just create one plan.
00:08:37.020 | We want you to create a plan
00:08:38.340 | and then experiment with what-if scenarios
00:08:41.360 | and think about all the different things
00:08:43.280 | that can happen along the way.
00:08:45.300 | 'Cause it's, you know, it's impossible to plan
00:08:47.340 | for, you know, a year from now,
00:08:49.100 | let alone 20 or 30 years from now.
00:08:51.820 | But what we can do is think through potential outcomes
00:08:55.700 | and have rough ideas of what we would do
00:08:58.220 | in different situations and really plan for them
00:09:00.860 | in a time where we're not stressed out
00:09:02.740 | or need to make any split-second decisions.
00:09:05.820 | Another thing I wanted to bring to everyone's attention
00:09:12.940 | is that we have a lot of free communities,
00:09:15.340 | free webinars, and free education.
00:09:17.460 | So I lead most of the demos.
00:09:20.180 | I lead office hours.
00:09:21.340 | If you have questions about the tool,
00:09:23.260 | you have a webinar every couple of weeks.
00:09:25.860 | I answer questions live.
00:09:27.380 | I go through different demos.
00:09:29.260 | We also sponsor Must Be Anything events
00:09:32.700 | with hot leaders from like all different parts
00:09:35.060 | of the financial industry.
00:09:36.740 | So all of that is free because, you know,
00:09:39.860 | our goal is to really get people educated
00:09:43.540 | and learning about different opportunities
00:09:46.260 | and strategies that can help them with financial wellness.
00:09:50.300 | We also have a Facebook group.
00:09:51.900 | We have almost 4,000 people in it right now.
00:09:54.100 | It's extremely dynamic.
00:09:55.700 | A lot of you are already members.
00:09:57.980 | We have a lot of great conversation
00:09:59.900 | about withdrawal strategies, news articles,
00:10:02.980 | how to use the tool, what assumptions people use.
00:10:06.180 | So it's a great place to collaborate
00:10:07.900 | and be able to plan with others
00:10:10.060 | and learn from others' experience
00:10:11.940 | because, you know, retirement is something
00:10:13.620 | that most of us only do one time.
00:10:16.060 | And then finally, we've mentioned a couple of times
00:10:20.940 | that we have additional services.
00:10:23.900 | So you can certainly schedule live appointments
00:10:27.020 | to review your plan for accuracy
00:10:29.140 | or for just help understanding some of the charts.
00:10:32.260 | I run most of those sessions.
00:10:34.300 | And then we also have a CFP in-house
00:10:37.020 | who will help you with your plan.
00:10:38.340 | And we really try to keep this low cost
00:10:40.620 | and we're able to do that
00:10:41.500 | because we're really leveraging our technology platform
00:10:45.260 | to do that.
00:10:46.100 | So any questions before I get started with the demo?
00:10:55.740 | Okay, so the first thing I wanna take everyone through
00:10:58.420 | is the onboarding process.
00:11:00.300 | Here, you're gonna start the plan.
00:11:03.260 | You have an option to go through a quick version
00:11:05.420 | or a comprehensive version.
00:11:07.220 | Tonight, I'm gonna go through the quick version
00:11:09.020 | just to give you a sense of the types of questions
00:11:11.660 | that are in the onboarding process.
00:11:13.700 | So we're gonna ask you a little bit about yourself,
00:11:16.060 | if you're married and have a spouse.
00:11:18.780 | We're gonna ask you generally about your household income,
00:11:22.660 | what you think your social security estimates are,
00:11:25.620 | how much you have in savings, at a very high level
00:11:27.940 | because once you go into the plan,
00:11:29.700 | you'll have an opportunity to refine it
00:11:31.740 | and add more assumptions.
00:11:33.460 | We're gonna ask if you have a pension,
00:11:37.340 | if you own your home or if you have a house.
00:11:40.180 | And then we ask also about medical expenses
00:11:43.100 | and your other monthly expenses
00:11:45.460 | or the things that you're paying for
00:11:47.500 | on a monthly or an annual basis.
00:11:51.020 | Once you finish up, you're gonna go to a dashboard
00:11:53.660 | and I'm actually gonna switch to my demo account here
00:11:56.820 | and you're gonna land on the dashboard page.
00:11:59.060 | When you're here, the first thing you might notice
00:12:02.900 | is your scorecard.
00:12:04.140 | So we're gonna give you a score.
00:12:05.940 | This represents the ratio of income to expenses.
00:12:10.300 | And it's just kind of one indicator
00:12:12.540 | that's letting you know, how are you doing?
00:12:14.180 | Are you on track to have enough income
00:12:16.340 | to cover your expenses?
00:12:18.420 | We're also giving you the current net worth
00:12:21.020 | based on the information that you entered into your plan,
00:12:24.260 | your average monthly retirement income,
00:12:26.980 | your end estate value.
00:12:28.660 | So how much you're projected to have at longevity age
00:12:32.180 | and if your savings are gonna run out.
00:12:34.820 | Okay, I recommend that you come back to these key indicators
00:12:38.500 | as you're making updates to your plan
00:12:40.700 | because they kind of benchmark where you start
00:12:43.900 | versus where you end up after you spend some time
00:12:47.260 | revising your plan, adding detail or doing what if scenarios.
00:12:50.900 | This main chart on the dashboard
00:12:54.260 | is called the lifetime retirement projections chart.
00:12:57.700 | Hey, I like to call it the story of retirement
00:13:01.020 | because what it's doing is it's showing us
00:13:03.340 | how our income is gonna cover expenses over time.
00:13:07.660 | So we start today here in 2021
00:13:12.180 | and we're looking out at our income.
00:13:14.060 | So all the columns represent income.
00:13:16.500 | We have different ways of sources of income,
00:13:18.980 | whether it's work, Social Security, annuities, pensions.
00:13:22.780 | And then we also count income as income
00:13:25.100 | that we're pulling out of our savings accounts.
00:13:27.420 | So 401ks, overtaking withdrawals in the future,
00:13:31.780 | we're considering that part of your income for retirement.
00:13:34.980 | The blue line that goes through this chart
00:13:37.700 | that represents expenses.
00:13:39.500 | So anytime you see the columns above the blue line,
00:13:42.420 | that means you have more income coming in
00:13:43.940 | than expenses in a given year.
00:13:46.180 | Also on this page, we're showing you
00:13:48.380 | your whole plan highlights,
00:13:49.500 | but what I really wanna do is show you
00:13:51.180 | all of the different areas of my plan that we can customize.
00:13:55.340 | So when I look at my plan,
00:13:56.980 | we kind of break it up into a lot of categories,
00:13:59.660 | the goals, income, Social Security,
00:14:02.300 | annuities and pensions, savings and assets, withdrawals.
00:14:06.580 | We're gonna just fly through some of these sections.
00:14:09.580 | On basic programs, we're gonna go through
00:14:13.260 | all of the different sections.
00:14:14.980 | On basic profile and goals,
00:14:16.940 | you're asking for your single or married filing status
00:14:21.620 | for your tax structure in the plan.
00:14:24.220 | We're also asking you for your longevity age
00:14:26.420 | of you and your spouse, if you have one.
00:14:28.660 | So we know how long we want your plan to be funded.
00:14:31.660 | The next thing I wanna show you is work and other income.
00:14:36.820 | This is where we're gonna enter
00:14:38.060 | any kind of earned income that you have.
00:14:40.540 | The nice thing about this section is it's really flexible.
00:14:43.820 | Not only do you put in what your current income is,
00:14:47.060 | you can model that in the future.
00:14:48.660 | So I'm gonna be earning income from now through age 60.
00:14:53.580 | If you're someone who is thinking about modeling
00:14:56.500 | a sabbatical or retiring early,
00:14:59.460 | or maybe one spouse wants to stay home with kids,
00:15:03.260 | you're easily able to model different ranges of work times,
00:15:07.980 | which can be really powerful
00:15:09.340 | when you're thinking through your scenario
00:15:11.460 | for your long-term projections.
00:15:13.820 | I also wanna call attention over here to your updates.
00:15:17.820 | So all of these charts are gonna update in real time.
00:15:21.020 | You have the option to look at a chart
00:15:23.380 | to see if your savings will run out,
00:15:25.460 | your savings balances over time,
00:15:28.420 | that same income versus expenses chart.
00:15:31.540 | You can look at your score or your taxes.
00:15:34.620 | So it's really helpful to toggle
00:15:36.140 | through these different charts,
00:15:37.660 | depending on what screen you're on
00:15:39.860 | and what supporting information that you have.
00:15:42.540 | So for example, all this updates in real time.
00:15:45.300 | So if I change my monthly income to $20,000,
00:15:50.300 | we're gonna see that my income,
00:15:52.940 | projected income went up in real time.
00:15:55.580 | So it had a big increase.
00:15:57.660 | Also on this page,
00:16:01.460 | you have the ability to model passive income.
00:16:03.700 | Most people use this to model income from rental property.
00:16:08.140 | The next section gets into detail about Social Security.
00:16:12.140 | So we ask you to enter in your Social Security
00:16:15.620 | based on your full retirement age.
00:16:18.020 | And that's so we can separately give you the option
00:16:20.940 | to choose when you wanna claim Social Security.
00:16:23.740 | So you have the option to claim early
00:16:26.820 | or to delay until when you're 70.
00:16:30.100 | As Steve mentioned,
00:16:31.020 | we will be coming out with the Social Security Explorer tool
00:16:34.780 | to help you dig deeper into some of those lifelong benefits
00:16:38.300 | and how you can optimize your planning strategy.
00:16:42.220 | Social Security is one area
00:16:43.700 | where we do allow you to model assumptions separately.
00:16:46.860 | So you can separately enter the cost of living
00:16:49.420 | appreciation for Social Security.
00:16:53.140 | Yeah, I will demo Roth and tax modeling.
00:16:59.500 | Absolutely.
00:17:02.300 | The next section is annuities and pensions.
00:17:04.780 | So you have the ability if you already own an annuity,
00:17:07.580 | you know the cashflow, you can put that in here.
00:17:10.340 | If you're thinking about purchasing an annuity
00:17:12.460 | in the future,
00:17:13.300 | whether it's an immediate or deferred annuity,
00:17:15.660 | you can put that here and enter in all the information.
00:17:19.180 | You also can model pensions.
00:17:21.620 | We have two different types of pensions.
00:17:23.740 | So we have a monthly pension when you know your cashflow,
00:17:26.980 | and we have a lump sum pension
00:17:28.580 | when you're expecting to have a monthly pension.
00:17:31.740 | If you're expecting to receive a lump sum value,
00:17:34.300 | we let you select the destination account
00:17:36.220 | for where that goes.
00:17:37.700 | This section can be particularly helpful
00:17:40.060 | if you're thinking about how you should take your pension,
00:17:42.540 | whether you should take it in a lump sum
00:17:44.380 | or whether you should take it over time.
00:17:46.460 | You can model one scenario that uses the monthly pension,
00:17:49.420 | another scenario that uses the lump sum,
00:17:51.860 | and then you're able to see
00:17:53.060 | how that affects your overall financial picture
00:17:56.460 | far into the future.
00:17:58.020 | (silence)
00:18:00.180 | The next section is savings and assets.
00:18:06.820 | So here we have,
00:18:08.460 | this is where we might model all of our account information.
00:18:12.060 | This first topic is about tax deferred accounts,
00:18:16.660 | both retirement income and other accounts.
00:18:19.500 | So here we see that in this example,
00:18:21.740 | we have a 401(k),
00:18:23.220 | we also have a Roth 401(k) and a Roth IRA.
00:18:27.460 | The spouse has a 529 plan set up for children,
00:18:31.620 | a former 401(k) and HSA plan.
00:18:34.300 | And then we also have a catch-all for other pre-tax.
00:18:37.380 | The account type is really interesting
00:18:39.060 | because when you make contributions to these accounts
00:18:42.060 | based on the type,
00:18:42.980 | it's gonna assume the tax treatment
00:18:45.900 | on the contribution and the withdrawal.
00:18:48.140 | So when I make a contribution to a Roth account,
00:18:50.980 | it's gonna know that it's taxed on the way in.
00:18:53.740 | And when I make a withdrawal from the Roth account,
00:18:55.740 | it's gonna know not to tax at all.
00:18:57.780 | Further down on the page,
00:19:02.940 | we also ask about other savings.
00:19:05.140 | So this is cash savings,
00:19:06.340 | whether it's in a bank account or a brokerage account.
00:19:10.300 | When you select capital gains treatment,
00:19:13.940 | that means that all the withdrawals
00:19:15.580 | coming out of this account
00:19:16.940 | are gonna be taxed at a long-term capital gains rate
00:19:19.820 | instead of at ordinary income.
00:19:21.900 | As long as you enter the cost basis,
00:19:24.100 | the proportional amount of growth
00:19:26.340 | will be taxed at the long-term gains rate.
00:19:28.420 | So very important to enter in the cost basis.
00:19:31.060 | We let you model contributing to different accounts.
00:19:36.940 | So as you have new income coming in,
00:19:39.100 | if you wanna direct it towards different savings goals,
00:19:41.740 | whether that's your 401(k) or HSA,
00:19:44.340 | you can certainly do that here.
00:19:46.180 | And then if you're expecting a lump sum
00:19:48.220 | or an inheritance, a windfall,
00:19:52.340 | we allow you to add after-tax contributions
00:19:55.500 | at a certain point in time in the future.
00:19:57.900 | Also on this page, you can model
00:20:02.100 | if you have cash value for business,
00:20:05.380 | you have collectibles or other assets.
00:20:07.940 | This section in particular,
00:20:09.340 | it's included in your net worth,
00:20:11.060 | but it's not considered liquid cash flow,
00:20:12.900 | so it's not included in most of the calculations
00:20:15.620 | when we think about withdrawal strategy
00:20:18.300 | and our liquid cash.
00:20:20.620 | Also on this page, and I'm scrolling back up,
00:20:24.300 | is an area for Roth conversions.
00:20:26.900 | So I know that's a big topic for everybody in this group.
00:20:31.060 | When I think about Roth conversions,
00:20:32.660 | I really like to look at taxes.
00:20:34.780 | So I'm gonna toggle to the tax area
00:20:37.140 | and click on the federal toggle.
00:20:41.140 | So here on this chart,
00:20:43.020 | we're able to see our projected tax liability
00:20:47.420 | broken down by tax bracket
00:20:49.700 | between now and the end of our plan.
00:20:52.060 | So we can see that in the future,
00:20:54.140 | like right now while I'm working,
00:20:57.180 | I'm in the 22% tax bracket.
00:20:59.540 | In the future, because of all the growth
00:21:01.940 | and the good savings that I'm doing,
00:21:03.900 | I might be in the 24% tax bracket.
00:21:06.620 | So that means that I could be eligible
00:21:08.660 | for Roth conversions as part of my strategy,
00:21:11.900 | and you're able to model that here.
00:21:14.100 | So I can see that I'm gonna be eligible
00:21:16.060 | for Roth conversions as part of my strategy.
00:21:18.980 | So I'm gonna click on that here.
00:21:21.300 | So I see that I have a tax window.
00:21:23.500 | I started filling this out,
00:21:24.900 | and as I enter in more information
00:21:28.380 | for the conversion amount,
00:21:29.860 | converting from my 401k into a Roth IRA account,
00:21:34.020 | you can see in real time that we're adding tax liability,
00:21:37.620 | but we're also reducing our future tax liability.
00:21:41.900 | The area in red on that chart
00:21:43.740 | is where we're adding tax liability forward.
00:21:46.140 | So using this chart and this section of the tool together
00:21:50.540 | to really experiment with a Roth conversion strategy
00:21:54.060 | on a Roth conversion ladder can be really powerful.
00:21:57.660 | You can also kind of see here
00:22:01.100 | that it is telling you on each click of the button
00:22:04.820 | whether your lifetime tax liability
00:22:06.620 | has increased or decreased,
00:22:08.660 | as well as showing you up here your lifetime tax liability.
00:22:11.980 | All of your tax liability between now
00:22:14.340 | and the end of your plan.
00:22:15.700 | While we're on the topic of withdrawals,
00:22:23.100 | I'm gonna talk about the withdrawal section next.
00:22:26.740 | So in the tool, we model
00:22:29.140 | several different withdrawal strategies.
00:22:31.420 | The based on spending needs strategy
00:22:33.620 | assumes that you're modeling exactly
00:22:36.140 | what you put into the plan.
00:22:39.660 | If your expenses exceed your income,
00:22:44.660 | then you're gonna start withdrawing
00:22:46.820 | from some of your accounts.
00:22:47.900 | So the tool actually has an order of operations
00:22:50.860 | for how we do this.
00:22:52.060 | We always take withdrawals from new income.
00:22:54.740 | Then we take withdrawals from taxable,
00:22:56.660 | then tax deferred, then Roth, then HSA.
00:22:59.740 | So this strategy right here
00:23:01.260 | is not necessarily showing you
00:23:02.380 | which account it's coming from.
00:23:04.020 | It's just showing you if it's taking a withdrawal
00:23:07.260 | from your accounts to meet your expenses
00:23:10.300 | modeled in the tool.
00:23:12.420 | The blue is representing your RMDs,
00:23:14.460 | your required minimum distributions.
00:23:16.860 | And as we make changes in the tool
00:23:18.940 | and change our expenses or bring forward withdrawals,
00:23:23.340 | your RMDs will change and update in real time as well.
00:23:27.220 | We have two other withdrawal strategies that you can model.
00:23:31.740 | Maximum spending is actually the opposite of spending needs
00:23:35.620 | when you're taking out only the expenses
00:23:38.060 | modeled in your plan.
00:23:39.500 | Maximum spending is actually taking out,
00:23:42.660 | it's reducing your plan.
00:23:44.940 | It's running an optimization to say,
00:23:46.580 | what if I wanted to deplete my assets
00:23:49.940 | for the entire plan by my longevity age?
00:23:54.500 | So I wanna deplete my assets by longevity.
00:23:57.060 | How much can I take out every single year
00:23:59.620 | to maximize my spending and my enjoyment
00:24:02.540 | of my money throughout time?
00:24:05.500 | So from here, you're able to set the date
00:24:08.420 | of when you want that to start
00:24:10.460 | and then experiment with how much money you can take out.
00:24:14.980 | So this can really help you have more comfort
00:24:17.660 | when making decisions.
00:24:18.820 | If you're thinking about, can I afford to go on vacation
00:24:21.940 | or can I afford to buy an RV or a second home?
00:24:24.900 | We also have a fixed percent withdrawal strategy
00:24:29.780 | that kind of uses the 4% rule.
00:24:32.140 | So we calculate 4% of your portfolio
00:24:36.140 | and inflate that over time
00:24:38.020 | and use that strategy for your withdrawals.
00:24:40.700 | For expenses, we have lots of different ways
00:24:48.860 | to model expenses.
00:24:50.580 | So you can just put in your monthly expenses.
00:24:53.380 | You can model it by different phases of time.
00:24:55.980 | So maybe before retirement, after retirement,
00:24:59.620 | maybe you're more into early retirement,
00:25:02.260 | mid retirement and later retirement.
00:25:04.420 | So this can be really helpful.
00:25:07.020 | If you wanna have a more detailed budget
00:25:09.900 | and do line item modeling,
00:25:11.900 | then we have a planner plus a budgeter
00:25:13.620 | where you can enter in all of these expenses.
00:25:16.420 | You can also take advantage of the ability
00:25:18.660 | to create multiple budgets,
00:25:20.660 | one for your basic expenses
00:25:22.980 | and one for more discretionary expenses
00:25:25.860 | so that you can match these up to your pessimistic
00:25:29.060 | or your optimistic assumptions.
00:25:31.140 | Next, we can model our real estate.
00:25:38.020 | So whether your primary residence is,
00:25:41.260 | you own it outright, you have a mortgage or you rent,
00:25:44.060 | you can model that here
00:25:45.860 | and we'll calculate the mortgage payments for you.
00:25:48.340 | The most important part of this section
00:25:50.020 | is putting in the zip code of your primary residence
00:25:53.700 | 'cause that's gonna actually determine
00:25:55.020 | your state tax structure.
00:25:57.860 | For Roth conversions, we looked at federal tax structure.
00:26:02.780 | For this section, I wanna look at state tax structure.
00:26:05.340 | So living in California, it's a very high tax state.
00:26:09.260 | We can see in the future while I'm working,
00:26:11.540 | there's a lot of taxes, as well as when I'm taking RMDs,
00:26:14.980 | there's also a lot of taxes.
00:26:17.100 | So one thing we can do is model a change
00:26:21.940 | to our primary location.
00:26:24.660 | Maybe we're thinking about relocating to Florida
00:26:28.140 | or Washington or Texas, a lower tax state.
00:26:32.380 | So in this case, in this scenario,
00:26:34.180 | I'm thinking about, okay, at 65, I'm retired,
00:26:37.940 | I'm gonna sell my primary home
00:26:40.380 | and I'm gonna buy a home in Florida.
00:26:42.940 | Okay, and when I look at this chart,
00:26:44.940 | I now can visually see the difference
00:26:48.020 | that I'm saving in taxes, which is pretty neat.
00:26:53.580 | So if you're thinking about moving,
00:26:56.060 | this is a great thing to experiment with.
00:26:58.660 | If you have other properties, you can also enter those.
00:27:01.980 | And then you can also model purchasing
00:27:04.260 | or selling real estate in the future.
00:27:06.700 | So we're not limiting you to just what you own now.
00:27:09.620 | We really want you to be modeling everything
00:27:11.980 | because we wanna show your whole financial picture.
00:27:14.860 | In terms of medical, we have a couple calculations.
00:27:20.340 | We want you to model your expenses before Medicare.
00:27:23.780 | And then we will estimate your Medicare cost
00:27:28.260 | based on a variety of different combinations of policies.
00:27:33.820 | Well, this is really neat because if you say, you smoke,
00:27:37.540 | we're gonna increase your estimate.
00:27:41.140 | This uses Medicare's API.
00:27:43.300 | So all the information is up to date.
00:27:45.300 | If you have other medical conditions,
00:27:47.420 | you're gonna increase your estimate.
00:27:49.660 | If you have other medical conditions,
00:27:51.260 | you're gonna see your costs increase.
00:27:54.100 | Of course, these are estimations.
00:27:56.740 | When you use estimate projected Medicare expenses,
00:28:00.620 | it will add in IRMA if that is something
00:28:03.500 | that you're subjected to.
00:28:04.660 | So the additional amount of Medicare fees
00:28:07.980 | that you have to pay if you're above
00:28:09.940 | a certain adjusted gross income.
00:28:11.980 | And lastly, we do a model long-term care.
00:28:17.940 | So if you have a spike towards the end of your plan
00:28:21.300 | in terms of expenses, that little spike
00:28:23.900 | is for long-term care.
00:28:25.100 | It's based on your longevity age
00:28:26.580 | and it kicks in three years before your longevity age.
00:28:30.300 | So that's kind of the big overview of things
00:28:35.740 | that you can do in the tool.
00:28:37.660 | After you go through all of your plan,
00:28:40.060 | you get all your information really accurate.
00:28:42.740 | Then we recommend that you do a few things.
00:28:45.380 | You go to coach suggestions.
00:28:47.380 | This is gonna run through your plan
00:28:49.860 | and it's gonna actually generate a series of rules
00:28:52.900 | that are gonna help you.
00:28:54.620 | So if you have gone through and created,
00:28:58.500 | made adjustments to your plan,
00:29:00.100 | these are gonna change.
00:29:01.020 | So if you looked at it at the beginning as we did,
00:29:03.620 | you wanna come back here to see if there are any changes.
00:29:06.460 | And I think I'll pause here
00:29:10.980 | and maybe start taking questions.
00:29:13.420 | (silence)
00:29:15.580 | - Michelle, a question for you.
00:29:22.500 | - Sure.
00:29:23.340 | - I was trying to solve some user technical issues
00:29:27.340 | so I might've missed it if you talked about it.
00:29:29.140 | I was just wondering about any incorporations
00:29:31.380 | of the recent rules for like the eight and a half percent
00:29:33.740 | healthcare and its effect on the subsidy
00:29:36.980 | or premium tax credit on the ACA stuff.
00:29:40.100 | - Yeah, so right now ACA is not included.
00:29:43.340 | That is something that you'd have to manually adjust for,
00:29:46.340 | but it is in our plans to add sometime later in the year.
00:29:49.660 | - Okay, thank you.
00:29:52.020 | I think you mentioned too that,
00:29:54.740 | I think you said a hundred dollars a month
00:29:57.500 | when I think you meant to say a hundred dollars a year
00:30:00.020 | when you went on the slide with the costs.
00:30:07.700 | - That's the membership cost or the signup cost.
00:30:10.900 | - Yeah, we charge $8 a month, but we charge it annually.
00:30:15.460 | So it's $96 a year and that's an annual fee.
00:30:19.540 | And then someone was asking,
00:30:21.700 | we do have a 14 day trial where you can try out everything
00:30:24.140 | that she's showing you.
00:30:25.420 | And if you decide to cancel on the 14 days,
00:30:27.140 | we do ask for a credit card up front,
00:30:28.220 | but we will never charge you.
00:30:30.260 | But for what it's worth, we are like,
00:30:33.300 | this is the challenge we have really.
00:30:34.380 | It's like, what's interesting is we see traditional,
00:30:38.260 | not both of those people, but many folks,
00:30:40.380 | they go to wealth advisors and they'll pay 1%
00:30:42.860 | of their million bucks, $10,000 a year,
00:30:45.340 | and they're fine with it.
00:30:46.740 | But then if you're like, oh, it's $100 for this.
00:30:49.140 | They're like, wait, but I'm paying.
00:30:52.060 | It's just a psychological difference that we see.
00:30:55.060 | - Yeah, we've heard that as we review tools.
00:30:57.180 | Somebody say, well, you have this free tool,
00:30:59.540 | but the other one's $5 for 400 features.
00:31:02.500 | And they balk at the $5.
00:31:04.260 | So it's amazing to me when talking about the money
00:31:06.900 | you're talking about here, people's, you know,
00:31:10.860 | their savings.
00:31:11.940 | There's a question.
00:31:13.060 | Is the plan in the demo a reasonable one?
00:31:16.500 | The question is, it looks like having huge incomes,
00:31:20.180 | like greater than 500 grand a year in the later years
00:31:22.620 | while spending very little in the early years,
00:31:25.460 | or is just the first cut applying suggested improvements?
00:31:29.380 | - Yeah, so this plan is very heavy in assets.
00:31:33.660 | It's a demo plan, so you want to take advantage
00:31:36.700 | of all of the different areas.
00:31:38.980 | And I also want to be able to show Roth conversions
00:31:41.780 | in a very visual way.
00:31:43.900 | So in order to do that, I did inflate the assets
00:31:47.340 | of savings and assets to give this person
00:31:50.020 | very large 401(k) and tax deferred balances.
00:31:53.660 | - Okay, could you talk a little bit
00:31:56.220 | about your privacy policy?
00:31:59.100 | - Yeah, so all of our data is encrypted
00:32:03.140 | and we use like bank-level security
00:32:06.260 | where we go through constant iterations of, you know,
00:32:09.740 | taking security audits and risk measures.
00:32:12.860 | And our security policy is on our website.
00:32:17.540 | - Yeah, it's been validated.
00:32:20.460 | We have a privacy policy in terms of use.
00:32:22.980 | We use a third-party group called TrustArk
00:32:26.260 | that reviews it every year.
00:32:28.540 | And we're also running our own security penetration tests
00:32:32.500 | and kind of auditing ourselves.
00:32:34.020 | And in fact, I mean, one interesting thing is
00:32:36.060 | we also have members of our community.
00:32:37.500 | We actually have a member of our community right now
00:32:39.180 | who's a recently retired security expert who was like,
00:32:41.860 | "Hey, listen, I'll volunteer my time to help you out."
00:32:43.740 | I mean, one thing that we see is actually
00:32:45.740 | our audience is full of very smart people
00:32:48.500 | who are super interested in this, who are helping us out.
00:32:51.460 | And so, you know, where it makes sense,
00:32:55.180 | we'll definitely collaborate with folks.
00:32:58.540 | But we take it super seriously.
00:32:59.820 | We know that it's, you know, we're holding people's,
00:33:04.420 | you know, super important information.
00:33:07.900 | Now, another way, one of the thought on this is
00:33:09.780 | we did actually purposely construct the tool
00:33:12.060 | so that you do put an email into create an account,
00:33:15.020 | but we don't ask for your full name, your phone number,
00:33:18.260 | your address, or anything else.
00:33:20.580 | And if you don't wanna link accounts,
00:33:22.700 | you can just do it manually.
00:33:23.660 | So you end up with, you know, you could semi-anonymize,
00:33:27.180 | you know, where your accounts,
00:33:29.100 | what your account names are,
00:33:30.900 | and then roughly put in your account values,
00:33:33.660 | and you're not giving away that much information.
00:33:35.180 | So we did that on purpose,
00:33:37.300 | but you can link accounts if you want to.
00:33:38.820 | And we work with Plaid,
00:33:41.500 | who's our, you know, data account linking provider.
00:33:45.060 | They power many of the top sites out there,
00:33:47.940 | or most of them.
00:33:48.780 | - Thank you.
00:33:51.100 | There's another question out there about state tax
00:33:53.660 | intricacies and the detail that required at the state level
00:33:56.620 | compared to the federal level.
00:33:58.900 | How do you deal with the states?
00:34:00.500 | - Yeah, so we try to keep the state data
00:34:05.300 | as up-to-date as possible.
00:34:07.740 | So it does correlate with all our different account types,
00:34:10.740 | so contributions and withdrawal going in,
00:34:14.140 | withdrawals coming out.
00:34:15.580 | We update everything once a year.
00:34:19.420 | - Yeah, I mean, and one of this is,
00:34:21.340 | this also goes back to learning with our community.
00:34:24.340 | We do hear, especially when we first rolled this out,
00:34:27.620 | you know, we'll hear from like a teacher,
00:34:30.220 | this is a true case, you know, in like New York,
00:34:32.780 | and they'll say, "Hey, my teacher's pension
00:34:36.140 | "is federally taxed, but not state taxed
00:34:38.740 | "'cause it's a state pension."
00:34:40.020 | And so we'll actually adapt the platform
00:34:43.660 | to handle that edge case.
00:34:45.660 | So we, you know, this, we do have to continually
00:34:49.220 | update the platforms so the projections
00:34:51.740 | stay as accurate as possible.
00:34:52.860 | And then we'll also shape it based on what we're hearing
00:34:55.220 | from live users.
00:34:56.660 | You know, we have thousands of users
00:34:57.900 | every day on this platform.
00:34:59.260 | - And could you speak to the, let's say,
00:35:03.340 | the architecture of the system?
00:35:04.700 | Like, is it in the cloud or where is it?
00:35:06.860 | Not in your basement, I hope, but.
00:35:08.700 | [laughing]
00:35:11.340 | - Yeah, so it is on the cloud.
00:35:15.940 | We actually did use to run our own data center way back,
00:35:18.180 | but it's all in the cloud.
00:35:19.420 | And, you know, we use industry standard best practices.
00:35:23.260 | I mean, it's built to scale.
00:35:24.820 | I mean, one thing you'll see is when you're using a tool,
00:35:26.340 | like we are running thousands of my Carlo simulations
00:35:30.180 | behind the scenes, we have built the platform
00:35:32.100 | to be able to run.
00:35:33.740 | So in our future vision, so there's 150,000 people
00:35:36.260 | that have created plans.
00:35:37.620 | You know, in the not too distant future,
00:35:39.020 | we wanna tax that to go to one and a half million people.
00:35:41.860 | We wanna be able to run thousands of simulations per user
00:35:46.500 | on a regular basis.
00:35:48.980 | So this will be, you know, billions of simulations
00:35:52.740 | we're running all the time.
00:35:54.620 | So we have architected the system
00:35:56.620 | and then you'll see it's pretty responsive
00:35:58.100 | and fast to do that.
00:36:00.780 | You know, we believe that planning can help
00:36:04.340 | not just people in the US when we have like people
00:36:06.180 | from India, Europe, all over the world using this thing,
00:36:08.940 | that it can help, you know, planning and education
00:36:12.140 | in a completely aligned way can help
00:36:14.340 | hundreds of millions of people.
00:36:15.660 | I mean, there's 7 billion people in this plan.
00:36:17.460 | A billion people have money, you know,
00:36:19.300 | and more are gonna get it as globalization happens
00:36:22.140 | and they need to make good financial decisions.
00:36:24.620 | The people in this group represent the top,
00:36:26.900 | you know, 0.0001% of financially educated people.
00:36:30.460 | And in an ideal future, we would leverage
00:36:34.340 | these kinds of communities to help other people
00:36:36.060 | that are much earlier in the education curve, you know,
00:36:40.100 | to make good choices for their whole lives.
00:36:42.260 | - When you, Michelle,
00:36:44.740 | when you showed us those recommendations,
00:36:46.740 | after you put in the rough cut plan,
00:36:48.060 | you went into a screen that had like six
00:36:49.940 | or eight recommendations.
00:36:51.740 | From your experience with all your users,
00:36:54.260 | what are the most common recommendations
00:36:56.180 | that people are missing that they should be doing?
00:36:59.340 | The suggestions from the coach, let's say.
00:37:01.940 | - Yeah.
00:37:02.780 | - In a bulk with all your users
00:37:04.980 | and what you guys have seen.
00:37:06.740 | - So we run this across, you know,
00:37:09.380 | over a hundred different rules and regulations.
00:37:13.860 | You know, almost everybody,
00:37:15.220 | we recommend review your plan with your spouse,
00:37:17.900 | you know, socialize it, talk about it,
00:37:20.140 | use this as a opportunity to talk about values,
00:37:24.100 | especially with someone who's not quite as interested
00:37:26.820 | in money 'cause usually the person who's super interested
00:37:29.420 | and makes this their hobby is the one filling out this plan.
00:37:33.940 | You know, we'll also run different calculations to see,
00:37:38.940 | you know, oh, this is out of average,
00:37:42.460 | or, you know, you missed an input.
00:37:45.340 | Often people will forget to put in medical expenses
00:37:48.140 | before Medicare.
00:37:49.580 | That's a very common one.
00:37:51.300 | Sometimes people will forget to put in a zip code
00:37:53.860 | in home and real estate,
00:37:55.820 | which is really important to take advantage
00:37:58.220 | of the more detailed state tax calculations.
00:38:02.180 | We'll run a lot of like scenarios to say,
00:38:07.180 | you know what, you've selected to withdraw money
00:38:09.460 | before you're 59 and a half, there might be a penalty.
00:38:12.500 | Now we don't model what the penalty would be,
00:38:15.140 | but we do try to alert you of any potential risks
00:38:18.140 | in your plan so you know where to investigate further.
00:38:21.260 | - I think you may have mentioned it,
00:38:23.500 | but do you take care of the IRMA surcharge
00:38:26.260 | on the high income, look back for Medicare?
00:38:29.420 | - We do.
00:38:30.260 | So we definitely take care of IRMA in the background.
00:38:33.860 | It's part of your medical assumption
00:38:36.180 | when you think about medical estimates.
00:38:38.780 | You know, one thing I didn't show
00:38:40.260 | are a lot of the insights charts.
00:38:42.380 | Once you enter your accurate plan,
00:38:44.340 | then we have all these charts
00:38:45.540 | that show very, very detailed assumptions.
00:38:47.740 | So here we're looking at the projections
00:38:50.140 | of estimated income and estimated expenses.
00:38:53.620 | So here, when we look at just this blue
00:38:55.940 | or our lifetime medical expenses,
00:38:59.060 | you know, this is inclusive of all your premiums,
00:39:02.380 | all your co-pays, long-term care insurance, IRMA,
00:39:06.140 | everything is all wrapped in these.
00:39:07.740 | And then you can click on any year
00:39:09.820 | to kind of freeze it in time for that year.
00:39:13.660 | So I'm looking at when I'm 77,
00:39:15.460 | it's telling me exactly what my medical projections may be.
00:39:20.420 | And then these are all in future dollars.
00:39:23.540 | (silence)
00:39:25.700 | - Michelle, there was a question earlier
00:39:31.140 | and I don't know if you covered it.
00:39:32.980 | I stepped away for a minute.
00:39:34.100 | It asked about if there was a spot for real estate taxes.
00:39:37.860 | Obviously we have people from around the country
00:39:40.700 | with vastly different property taxes.
00:39:43.140 | Is there a spot for that in there?
00:39:45.460 | - Yeah, so one thing that we do
00:39:47.460 | is we ask for, you know, your current home value
00:39:52.100 | and, you know, then we estimate what you might sell it for,
00:39:56.540 | but we actually don't calculate the tax
00:39:59.460 | because so many people do customize strategies
00:40:02.620 | with depreciation, 1031 exchanges.
00:40:05.740 | So what we do recommend is that you kind of figure out
00:40:08.820 | what you think that your tax liability will be,
00:40:12.340 | you know, based on what you bought the house for.
00:40:14.100 | We don't ask for that.
00:40:15.580 | And then put that amount in expenses modeled as an expense
00:40:19.180 | because that's gonna make your plan a little more accurate.
00:40:22.060 | - Thank you.
00:40:22.900 | - One other thing that I didn't show
00:40:30.740 | is the Roth conversion explorer.
00:40:32.980 | So Steve has mentioned this a few times.
00:40:36.300 | It's actually an engine that's kind of looking at your plan
00:40:39.380 | and calculating thousands of different combinations
00:40:43.780 | to try to figure out what strategy for Roth conversions
00:40:48.580 | is gonna generate the largest estate at longevity.
00:40:52.380 | So this ran through my plan and it's projecting that,
00:40:55.620 | you know, if I do Roth conversions,
00:40:57.740 | I might have over 2 million more dollars
00:41:01.460 | at the end of my plan or my longevity.
00:41:04.580 | It's gonna give me the year to convert, each age,
00:41:08.660 | what account and the amount that it should come from.
00:41:11.620 | Now, right now, this tool is separate from the plan.
00:41:14.420 | So you actually have to manually enter it in your plan.
00:41:16.940 | But what this does is it really like gives you
00:41:18.940 | a starting point for your strategy
00:41:21.100 | and it helps you think about it in, you know,
00:41:24.060 | a way that is very hard to calculate on your own
00:41:26.620 | because it's including all of the different aspects
00:41:28.860 | of our plan.
00:41:29.700 | It's including new income coming in,
00:41:31.380 | it's including taxes, it's including IRMA,
00:41:34.020 | it's including, you know,
00:41:35.140 | how your expenses change from year to year.
00:41:38.300 | So it's pretty neat.
00:41:39.780 | As I scroll down the page,
00:41:40.900 | you can actually see the comparison of taxes
00:41:43.860 | between the plan that you have modeled
00:41:46.180 | and the plan in the Explorer.
00:41:48.300 | So you kind of notice that, you know,
00:41:50.180 | with your current plan, you're paying less taxes upfront,
00:41:54.700 | but then it kind of switches.
00:41:56.980 | And in the future, the Roth optimized plan,
00:41:59.860 | you're paying less taxes.
00:42:01.820 | And this is actually one place where we do expose IRMA.
00:42:04.940 | So if you are looking for that, you can see it here,
00:42:08.700 | that in the optimized plan,
00:42:11.500 | by doing those conversions earlier,
00:42:13.980 | for a long period of time in the future,
00:42:15.760 | you're actually reducing your IRMA surcharge completely.
00:42:18.560 | - Michelle, we have also a question
00:42:29.380 | about can we handle income from an S-corp
00:42:33.300 | where not all income is taxed the same way?
00:42:36.380 | - Yeah, so for real estate and S-corp,
00:42:40.420 | the way that we recommend doing it
00:42:42.740 | is instead of putting in the gross amount,
00:42:47.480 | that you put in the profit amount as income.
00:42:51.020 | That's where we are today.
00:42:52.320 | - Michelle, I think there was a question earlier
00:43:03.280 | about changes in asset allocation through time.
00:43:06.640 | Could you speak to that a little bit more?
00:43:09.680 | - Yeah, so what we do right now is,
00:43:13.620 | sorry, let's go to the right page.
00:43:17.220 | On the savings and assets page,
00:43:19.540 | we ask for two different values,
00:43:21.700 | an optimistic and a pessimistic growth rate.
00:43:24.300 | And that's so you can toggle between these.
00:43:26.940 | You'll see your whole plan update in real time,
00:43:29.900 | depending if you choose optimistic or pessimistic.
00:43:33.540 | The optimistic and pessimistic growth rates
00:43:35.480 | are how we mirror the asset allocation
00:43:38.060 | that's actually in this account.
00:43:39.720 | So when I look at my 401(k)
00:43:41.880 | and I see a growth rate of 8% and 5%,
00:43:44.720 | I think it's invested in growth stocks.
00:43:48.800 | Now, today, this represents
00:43:50.880 | over the same value every single year.
00:43:54.440 | So you really wanna choose a value
00:43:56.160 | that is like a rolling average,
00:43:58.680 | not necessarily representative of just a couple years.
00:44:03.680 | You wanna think about the entire time span.
00:44:07.220 | There are ways to kind of override it
00:44:09.080 | and kind of shift money into another account
00:44:11.880 | if you really wanna completely change your asset allocation.
00:44:15.200 | In general, just recommend that you pick a happy medium
00:44:18.920 | that is representative of the entire lifespan of your account.
00:44:23.920 | - Yeah, I think what they're asking for is,
00:44:26.640 | I'm 45 and I don't mind being 100% in the stock market,
00:44:30.000 | but by the time I get to be 65,
00:44:31.960 | I wanna be 50% in the market.
00:44:34.200 | And by the time I'm 80,
00:44:35.220 | I wanna be 90% in bonds or something like that.
00:44:38.060 | I think that's the idea.
00:44:39.420 | - So we'll be making updates to asset allocation
00:44:43.220 | to include that functionality
00:44:44.900 | and some other stuff around just being able to pick,
00:44:47.820 | I'm in growth funds, I'm in bonds,
00:44:49.540 | and make these projections a lot easier.
00:44:51.980 | In general, this tool is super flexible
00:44:55.460 | and there's definitely a workaround for everything.
00:44:59.720 | So today, the workaround
00:45:01.060 | for completely shifting your asset
00:45:04.080 | is to actually just create a second temporary plan
00:45:08.680 | that will be in the future
00:45:10.780 | and then manually transfer the balance into that new account
00:45:15.680 | using our manual withdrawal and transfer area.
00:45:18.720 | And then you're able to kind of, in the future,
00:45:21.060 | shift the money and then it starts growing
00:45:23.240 | at a different rate that might be more conservative.
00:45:26.360 | - Yeah, I mean, to be fair, I mean, we are definitely,
00:45:29.000 | we're hearing this from other people too.
00:45:30.280 | So we are working on a UX redo of this whole section
00:45:34.280 | to make it simpler to do what we're hearing from users,
00:45:38.400 | which one of them is like, hey, I will,
00:45:40.700 | I'm planning on essentially de-risking my portfolio
00:45:43.420 | as I get older.
00:45:44.260 | - Do we have any other questions?
00:45:53.220 | You can put them in the chat.
00:45:54.680 | - Let's do one more chart 'cause I didn't show this yet.
00:45:59.680 | This is pretty nifty.
00:46:08.000 | It's our tax projection chart.
00:46:10.160 | So we've looked at some of these values already
00:46:12.360 | as a small chart, but this is a much larger chart.
00:46:15.920 | This is showing you your projections for estimated taxes.
00:46:19.800 | It's showing you the actual like source of the tax
00:46:22.760 | of how we're figuring it out.
00:46:25.120 | And then it's also showing your tax deductions,
00:46:28.480 | whether you're taking a standard deduction
00:46:30.640 | or you're able to kind of benefit
00:46:33.160 | from some other information.
00:46:35.800 | And then at the bottom, we have this larger chart again,
00:46:38.240 | that's showing the different tax brackets.
00:46:41.340 | Something crazy is going on with this chart,
00:46:44.960 | but normally it shows standard deductions.
00:46:50.920 | We have a question about modifying values.
00:46:53.880 | Yeah, we basically restricted Planner
00:46:57.040 | to limit the changing of rates
00:46:59.840 | and that's only available in PLOS.
00:47:01.320 | But again, if you really wanna not pay anything,
00:47:06.320 | you can sign up for PLOS, put a credit card in,
00:47:08.680 | change everything, print your plan, cancel,
00:47:11.880 | and you'll have a complete plan.
00:47:12.960 | In fact, and we'll also save the data.
00:47:15.520 | What you'll lose is the ability to make changes
00:47:18.120 | in the future and kind of manage it over time.
00:47:21.100 | And we have had some users game us where they're like,
00:47:23.620 | they'll do that, cancel, come back a year later,
00:47:25.620 | sign up, cancel.
00:47:27.060 | But for what, I mean, really like we're trying
00:47:30.220 | to build a business that does this in a very different way,
00:47:32.420 | but we can only do it if the model works at scale,
00:47:36.940 | like we get enough users that support
00:47:38.620 | kind of how we're trying to do business.
00:47:40.620 | Michelle, there's a question about tax rate assumptions
00:47:49.820 | and future tax rates changing or sunsetting.
00:47:54.140 | If you wanna maybe talk about how that would be modified
00:47:56.740 | or such in there.
00:47:57.580 | - Yeah, so the tax structure that we use
00:47:59.820 | is today's current tax structure,
00:48:01.940 | and that's used for the duration of the plan.
00:48:04.500 | So we use today's tax structure for today
00:48:07.700 | and in the future.
00:48:09.020 | We do get a lot of requests to be able to model
00:48:13.100 | the projected potential change in 2026,
00:48:16.540 | and even change, be able to adjust
00:48:18.780 | to make the future have a higher tax rate.
00:48:21.220 | So it's something that we're thinking about
00:48:22.900 | and considering, we know it's a highly desired feature.
00:48:26.580 | - Thank you, and then there was a question there
00:48:31.860 | about matching an advisor with a client.
00:48:36.500 | How do you do that?
00:48:37.380 | Do you have any criteria for that?
00:48:39.060 | - So we're talking a lot about our service model right now,
00:48:44.380 | and Michelle actually, in addition to like managing
00:48:46.980 | and doing all these demos and everything else,
00:48:48.860 | runs services for us.
00:48:49.700 | So we, today we have a very limited,
00:48:53.020 | we have advisors internally,
00:48:55.660 | but we are looking at making this available
00:48:59.900 | to through other advisors,
00:49:02.580 | that offer at least flat fee
00:49:05.460 | and completely transparent pricing.
00:49:08.100 | Users can definitely take this and many of them do.
00:49:12.940 | They sign up themselves and they have an advisor
00:49:15.460 | and they share it with their advisor,
00:49:17.140 | either the printed version
00:49:18.180 | or they collaboratively do it with them.
00:49:20.820 | We are gonna be making collaborative planning.
00:49:23.260 | We do it internally,
00:49:24.500 | but we'll make that easier for the user to control
00:49:27.260 | or they can grant access to other people if they want to.
00:49:30.420 | You'll see that evolve over the course of this year.
00:49:34.620 | We're not really, I mean, our main focus is the software
00:49:38.300 | and supporting the user base and changing it very quickly.
00:49:43.900 | Our expertise is not building a giant CFP network.
00:49:48.300 | - Steve, on one of those screens,
00:49:51.940 | you talked about refactoring the UX
00:49:54.860 | for asset allocation things.
00:49:57.300 | Could you just tell us about that process
00:49:59.020 | when you get a bunch of requests on the same thing
00:50:01.020 | and you guys decide to go down the path and make the changes
00:50:04.460 | and how does that actually happen?
00:50:06.300 | And then how do you test that what you did
00:50:09.220 | didn't blow up other things and how do you roll it out?
00:50:13.540 | - Sure, so our team has grown
00:50:17.300 | and we basically doubled in the past year
00:50:19.740 | and we did get a little institutional funding,
00:50:23.980 | but we're still relatively lightly funded company.
00:50:26.660 | We've raised a total of $5 million in this company,
00:50:30.220 | which is like nothing compared to like a personal capital
00:50:32.540 | that's raised $250 million, which is good
00:50:35.500 | because we're focused on keeping our costs low
00:50:37.940 | and keeping our infrastructure costs super low
00:50:40.100 | so that we can keep our prices low.
00:50:42.900 | But basically, yeah, we hear from users.
00:50:45.820 | We do a lot of support.
00:50:47.380 | So Michelle's team does all the intercom chat support.
00:50:50.740 | So we'll hear from users that way, office hours, AMAs.
00:50:54.540 | We definitely are listening to users all the time
00:50:56.780 | and seeing what they want.
00:50:59.500 | And then we have a roadmap that where we're decking up,
00:51:02.220 | hey, this is what users want.
00:51:03.220 | This is where we think the product needs to go.
00:51:05.660 | We design those things.
00:51:06.580 | We use some various back office testing platforms
00:51:10.620 | so we can test the UX.
00:51:11.700 | We also have a beta program, which you can be part of
00:51:13.740 | and certain features you'll see are marked as beta.
00:51:17.580 | So if you're in the beta program,
00:51:19.060 | there's actually two levels.
00:51:20.660 | There's like, hey, you have to be part of the beta program
00:51:23.220 | to even see it.
00:51:25.020 | And then we'll make something beta
00:51:26.860 | and publicly available, but it's still marked as beta
00:51:29.020 | 'cause it's still being worked on.
00:51:30.860 | So we kind of roll it out in phases.
00:51:35.860 | - Okay, thank you.
00:51:40.660 | - And just to answer your testing questions
00:51:42.900 | and accuracy questions, I mean, we do a lot of,
00:51:45.420 | so we write unit tests for the software.
00:51:48.460 | We can run simulations.
00:51:49.860 | So like this past quarter, we created the ability to run,
00:51:54.860 | we actually used to run forecasts locally on your machine.
00:51:58.100 | Now we run them server side.
00:51:59.820 | So like, for instance, we're rolling out some changes
00:52:02.780 | to our scoring methodology right now.
00:52:05.020 | So we are running scores for high scores
00:52:07.860 | and we are running scores for hundreds of thousands
00:52:10.620 | of people behind the scenes or accounts behind the scenes
00:52:14.060 | to make sure that the changes that we're doing
00:52:16.860 | as a way to kind of like test them all at once.
00:52:22.060 | I mean, this is all kept internal,
00:52:23.300 | but we basically run simulations and unit tests
00:52:27.420 | at scale today behind the scenes
00:52:29.500 | in order to kind of like see how are these changes
00:52:32.500 | affecting people's plans.
00:52:37.260 | - Okay, there's a couple of more questions in the chat.
00:52:40.500 | Does the plan model the indexing
00:52:42.140 | of the standard deduction and tax bracket?
00:52:44.700 | Basically, does it assume the top of the 22% bracket
00:52:48.260 | in 20 years is the same dollar amount as today
00:52:51.700 | or does it go up by some amount?
00:52:54.460 | - So we increase the brackets and the deductions,
00:52:57.020 | the rates stay the same.
00:52:58.860 | And those increase based on your inflation rate
00:53:01.460 | that you've put in.
00:53:02.860 | So we model, I pointed out that you can model
00:53:05.340 | the social security inflation rate.
00:53:07.460 | You can also model home and real estate separately,
00:53:09.900 | medical inflation separately,
00:53:11.940 | and then a general inflation rate for expenses.
00:53:15.380 | And so the tax is increased
00:53:17.180 | with the general inflation rate that you've modeled.
00:53:19.780 | - Okay, and here's the question.
00:53:23.140 | Did you see the question there about the MFJ?
00:53:25.860 | - Well, the other part of that question
00:53:28.700 | was about standard deductions and itemized.
00:53:34.940 | So the tool actually go through
00:53:37.540 | and only if you use the budgeter for expenses,
00:53:42.020 | it will calculate whether or not
00:53:44.660 | it thinks you're better off itemized taxes
00:53:47.140 | or standard deduction.
00:53:48.780 | And within the budget,
00:53:49.780 | you can actually set different items to be tax deductible.
00:53:53.140 | So if you're making charitable gifts
00:53:54.900 | or you're taking write-offs for business
00:53:58.500 | or other purposes, property taxes,
00:54:02.260 | it will factor that into your tax calculation.
00:54:05.220 | - Here, I'll take the question about Monte Carlo and income.
00:54:09.900 | I mistyped in there.
00:54:11.060 | So basically we want to,
00:54:13.300 | we're rolling out Monte Carlo
00:54:16.500 | for every investable asset class that has risk
00:54:21.420 | and giving users more and more control over that.
00:54:23.940 | And then,
00:54:24.980 | you know, again,
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