FRP - Conservative Policy Restores What Portion? [Flexible Retirement Planner]

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inputjam
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Joined: Sat Sep 18, 2021 2:29 pm

FRP - Conservative Policy Restores What Portion? [Flexible Retirement Planner]

Post by inputjam »

I read that Flexible Retirement Planner (FRP) "Conservative" spending policy:
Basically, in any year where the portfolio shrinks and the portfolio balance is smaller than it was at the start of retirement, this policy withholds the cost of living increase (cola) for that year... Otherwise, if the portfolio is bigger than it was at the start of retirement, some extra purchasing power that was lost in previous years is restored.
My wife asked me, "How much is restored?" and I had to admit I dunno. What *is* the calculation for restoring lost purchasing power?
Silk McCue
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Re: FRP - Conservative Policy Restores What Portion?

Post by Silk McCue »

Did you check out their support forum. I did you use the product that’s where I would look.

https://www.flexibleretirementplanner.c ... php?t=1032

Cheers
FRP_Jim
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Re: FRP - Conservative Policy Restores What Portion?

Post by FRP_Jim »

In addition to posting to the forum as Silk McCue suggested, you can also email questions to info@flexibleretirementplanner.com. (Please don't include any personal financial information in your email because email is not guaranteed to be secure.)

Now on to inputjam's question. The amount of purchasing power that's restored depends on how large the portfolio balance is compared to the portfolio balance at the start of retirement. If the portfolio balance is greater than the retirement balance but less than 2 times the (real) balance at retirement start, the amount (percent) of spending that's restored each year is 1/4 the inflation rate. If the portfolio balance is at least 2 times the (real) balance at the start of retirement, the amount (percent) of spending that's restored is the inflation rate.

You can see the median value for the percent of expenses that got funded each year in the "Detailed View" tab after you run the planner. (fyi, to see more information in this table, you can click the show more details radio button, then right-click on any column header and select show all columns. Also, you can export the data in this table by right-clicking any cell in the table).

Finally, check out the settings to see more spending policy controls. There's a spending policy floor and ceiling percent that lets you control the lower and upper limit for the percent of expenses that get funded each year. There's also a spending adjustment multiplier that can be set to speed up or slow down the rate of adjustments to the percent of expenses funded (the adjustment is multiplied by this so if the adjustment was going to be plus 3% and the multiplier is 2, the adjustment will instead by 6%).

Jim
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LadyGeek
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Re: FRP - Conservative Policy Restores What Portion?

Post by LadyGeek »

FRP_Jim is the developer of flexibleretirementplanner.com. Welcome!
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
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LadyGeek
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Re: FRP - Conservative Policy Restores What Portion? [Flexible Retirement Planner]

Post by LadyGeek »

This thread is now in the Personal Finance (Not Investing) forum (retirement planning). I also clarified the thread title to help with the acronym.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
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