Optiml

[FIRE Artist]

Has anyone else tried out Optiml for retirement income planning?  I did the 14 day trial, and ended up signing up for the paid license as I really didn’t get enough time to play with it in the trial period. It took me a bit to get the hang of things.

I am 3-5 years out from pulling the plug on working, and was planning to hire an advisor to run some retirement income models for me so that I can narrow down my plan over my remaining work years. That is how I found Optiml.  The models this app puts out look pretty slick, but I am sceptical.  Of course I love the price vs paying a professional to run the numbers for me.

What I am wondering is if anyone knows how the Optiml output compares to a financial planner prepared plan, and if you trust what Optiml is telling you. 

[erp]

Big picture, paying a fee only financial planner to chug through your numbers and give some advice would probably cost somewhere between $300 and $1000; unless you're looking at something very complicated (ie. selling businesses, or optimizing cash flow from a rental empire which you're also selling down, etc.). That works out to a tiny one time cost on a large stash, and what you're actually trying to buy is a second opinion and a connection who can answer weird questions. I'm not sure that an opaque financial planning model would actually give me the "did you think of X" feedback that I'd be likely to hire someone to provide.

Unsurprisingly, I'm pretty firmly against hiring a financial planner who's compensation structure is based on how much you have invested, because the conflict of interest might be substantial, but it seems like a one time (or even once every few years) cost from a fee-only advisor would be negligible.

[FIRE Artist]

I’m well versed on all the tricks typically used by financial planners to flesh out a retirement income stream, thanks to the book Retirement Income for Life, and Youtube channels like Parallel Wealth and Well Built Wealth.

With Optiml I am able to test out similar models that the professionals run, I am just wondering how the algorithm stacks up to professional software with respect to the resultant models. Part of my skepticism is from the fact that it is in beta test and the developers still seem to be working out bugs and adding new features. I guess I should wait another year before making any decisions.

Parallel Wealth and Well Built Wealth both charge a flat rate of 3500 to build out a stand alone retirement income pla, and then reduced fees for updates.  I suspect that someone more local would be cheaper but not nearly as cheap as 300 - 1000. I haven’t yet looked for quotes though.

[c-kat]

I have Optiml but not sure how long I'll keep it. I'm 7 years from retiring and both DH and I are still working but the plan optiml generates says I should withdrawal money from our RRSPS every year between now and retirement and pay tax on it which makes no sense and there doesn't seem to be a way to ask for another option.

[FIRE Artist]

I have Optiml but not sure how long I'll keep it. I'm 7 years from retiring and both DH and I are still working but the plan optiml generates says I should withdrawal money from our RRSPS every year between now and retirement and pay tax on it which makes no sense and there doesn't seem to be a way to ask for another option.

Yeah, it seems to do that if it calculates that your expenses while working are higher than the calculated net income.  There is an issue with the net income calculation as it seems to ignore pension contributions, which would lower your tax burden today, giving you higher net income. These are the kinds of things they need to fix. It has improved a bit since I have started working with it last month, as some of the models were just crazy, draining my non-registered in early retirement, leaving a huge tax bill and OAS clawback. I am not super happy about paying for the privilege to be their Beta tester. 

What I do like is that I want to start spending down my savings over the last few years of working, and it will model that. I am in a position where I will make more in retirement than working, it has helped me see that I need to stop putting money into my rrsp for the last few years of working.

The thing I am not sure about is that it is telling me I can withdraw quite a bit more than other models, including my own variable percentage model, so I am suspicious.  🤨

I think I am going to have to go back to plan A and hire someone to run a plan for me. Since I paid up for a year of Optiml, I will wait until the fall, hopefully it will be more stable by then.

[erp]

I’m well versed on all the tricks typically used by financial planners to flesh out a retirement income stream, thanks to the book Retirement Income for Life, and Youtube channels like Parallel Wealth and Well Built Wealth.

With Optiml I am able to test out similar models that the professionals run, I am just wondering how the algorithm stacks up to professional software with respect to the resultant models. Part of my skepticism is from the fact that it is in beta test and the developers still seem to be working out bugs and adding new features. I guess I should wait another year before making any decisions.

Parallel Wealth and Well Built Wealth both charge a flat rate of 3500 to build out a stand alone retirement income pla, and then reduced fees for updates.  I suspect that someone more local would be cheaper but not nearly as cheap as 300 - 1000. I haven’t yet looked for quotes though.

Yeah, you're right - I was way off on my initial guess. I've historically used the New School of Finance when I needed/wanted a fee-only planner, and they price their couple's retirement planning at ~ 1600 CAD. Sorry for misleading you!

[c-kat]

The thing I am not sure about is that it is telling me I can withdraw quite a bit more than other models, including my own variable percentage model, so I am suspicious.  🤨

I think I am going to have to go back to plan A and hire someone to run a plan for me. Since I paid up for a year of Optiml, I will wait until the fall, hopefully it will be more stable by then.

Same it has us spending 25% more than what I calculated myself. They probably use a higher withdrawal rate. Fianancial planners usually use 5.13%.

[FIRE Artist]

The thing I am not sure about is that it is telling me I can withdraw quite a bit more than other models, including my own variable percentage model, so I am suspicious.  🤨

I think I am going to have to go back to plan A and hire someone to run a plan for me. Since I paid up for a year of Optiml, I will wait until the fall, hopefully it will be more stable by then.

Same it has us spending 25% more than what I calculated myself. They probably use a higher withdrawal rate. Fianancial planners usually use 5.13%.

I think it is an accumulation of factors - default inflation values, flexibility in entering in investment returns, and then the optimized tax plan.   I don’t think they use a fixed withdrawal rate, rather make it a function of how long you will be in retirement.  I am running the max spend option.  I wish there was some additional transparency on the withdrawal calculation.

What I really like about the app is that it allows me to model starting to draw down my investments when still working during the next 4 years of working.  I want to start taking better, longer trips before I retire, I get 7 weeks off per year and am expected to take it. 

[FLBiker]

I've played with a few different drawdown tools but I've been underwhelmed.  Admittedly, my situation is complicated (I'm crossborder) but (to me) that shouldn't be so hard to handle -- they're just accounts with different tax statuses and age restrictions.  Regardless, the biggest frustration to me is an inability to not fully sequence accounts.  In other words, I don't want to fully draw down one type of account, then the next type, then the next type.  I want to balance the drawdown between a couple of different account types (e.g. taxable and tax-deferred) to minimize my tax burden, rather than fully drawing down one then the other.  The only way I've been able to model this (so far) is Excel.

Does Optiml allow for this type of blended drawdown strategy?  And does it handle US account types as well?

[c-kat]

What I really like about the app is that it allows me to model starting to draw down my investments when still working during the next 4 years of working.  I want to start taking better, longer trips before I retire, I get 7 weeks off per year and am expected to take it.

Yes, DH and I are thinking about doing that in a few years. We both work places that allow unpaid sabbaticals so could do that and draw some of the money early and travel.

[FIRE Artist]

I've played with a few different drawdown tools but I've been underwhelmed.  Admittedly, my situation is complicated (I'm crossborder) but (to me) that shouldn't be so hard to handle -- they're just accounts with different tax statuses and age restrictions.  Regardless, the biggest frustration to me is an inability to not fully sequence accounts.  In other words, I don't want to fully draw down one type of account, then the next type, then the next type.  I want to balance the drawdown between a couple of different account types (e.g. taxable and tax-deferred) to minimize my tax burden, rather than fully drawing down one then the other.  The only way I've been able to model this (so far) is Excel.

Does Optiml allow for this type of blended drawdown strategy?  And does it handle US account types as well?

Yes, the whole point of Optiml is to model the best withdrawal options for tax optimization. It gives me a blended draw down from registered and non registered. It is not perfect, but is does avoid OAS clawback for me, which is good.

They have been promising to add a full control option that would let you force an RRSP draw down by specific dates, etc. not released yet though.

I don’t think it allows usd accounts, but I haven’t looked for that feature. It definitely wouldn’t handle us taxation considerations. You can add multiple account types though.

I have left it for the time being and will try it again in 6 months once they have released the promised changes.  For me though, it looks to be much better than just using my excel spreadsheets.

[AJDZee]

I splurged on a 1-year membership to Projection Lab.
I was happy to support the creator of it, it's a beautiful tool that's both intuitive, simple AND extremely customizable. (very rare to balance both)

It's an american program, but you can load in all the canadian accounts and tax brackets.

I'm happy with it however I will not be renewing after my 1-year membership because the program doesn't do everything I want (what is discussed above), optimize tax planning, avoid clawback, etc.
You can plan all kinds of draw down scenarios, but the program falls short of running through all the permutations for you and telling the user the most optimal way.

It's a power tool for visualizing accumulation, and cashflow, and scenario planning, if that's all you're looking for.
hoping Optimal continues to improve, might consider it in the future.