Show HN: Fortunately – Understand the tradeoffs of financial decisions
app.livefortunately.com
app.livefortunately.com
Feedback:
- If saving for a home is an immediate goal, and the simulation showed it to be successful, (99% likely), Have an entire graph dedicated to showing how deceiving, down payment and mortgage payments will work.
Given present macro:
- be sure to provide some idea that your mortgage calculations reflect realistic rates. Many calculators assume low. Maybe you already factor in a refinance? Mention it!
Whether a retirement will happen is boring compared to whether we are on track to buy a home.
I’d suggest even splitting the results into completely separate pages with way more things to do / detail in each.
- a cash drawdown into stocks now? The knife is falling presently. Perhaps some trimmings on preparing to enter the market, but surely you wouldn’t advise home down payment money be invested immediately? the market is ~in free fall.
- please make the slider buttons larger and easier to grab
- when making user wait, show “running simulations” or maybe a calculations looking animated spinner so it’s clear what is happening during that pause. (Your fancy math) perhaps brand your simulator with a cool name
Ask for an email but also provide some idea of amaze privacy / unsubscribe. (We don’t track you, we delete accounts, always your choice etc. and honor this super consumer friendly stance toward finance.
These are some fantastic ideas. The idea about separating out results is one we've been kicking that around recently too, but you got to it a lot faster than we did. :-)
On "surely you wouldn’t advise home down payment money be invested immediately?" this is actually a really cool part of our product, we change your asset allocation based on how proximate your goals are… so if you have an upcoming home purchase, we recommend the savings you need for it is allocated much more towards bonds and cash, while any savings for goals is allocated toward higher growth opportunities.
We need to highlight that more. Here's a screenshot of how it works in the product: https://imgur.com/a/78CwP83
Thanks again for the supportive and constructive feedback! Really, really appreciated.
If you see this, I'd suggest mentioning that this information is available if you sign up for the product.
You may have said this in there, but I'd also suggest making it clear that all the information already entered will be imported automatically. (they don't have to do it all again)
It’s easy for super paid engineers to figure out retirement because it will likely just automatically happen for them between high salaries / aggressively competitive benefits or stock windfalls if they can curb lifestyle spending habits and just work moderately hard.
For the rest of us… different story and life long commitment to reaching financial independence “the hard way”.
Some feedback:
- The end screen I wish was configurable or easier to see is this inflation adjusted or assume x% growth rate. This widget is the best I’ve used check it out: https://www.bankrate.com/banking/savings/save-million-calcul...
- I never know — and struggle - do these assume wage growth or not with inflation? I find this always the worst at trying to figure out savings and confusing. Maybe help digest that.
- “FIRE life hacks” or some fun name could also be useful. For example, paying down mortgage with extra payments, sell your car and get one 30% cheaper, killing expenses by x%, move that cash to index fund for 22 years left until retirement, side gig that produced $500 a month, or paying student loan debt or not faster. Would be cool to automate this with reasonable default recommendations. So less, hey your set or not make a plan, and more here’s your situation but here’s the best possible thing you could be doing. I think it could driver greater impact and people more likely to be motivated.
Either way, will definitely share this with friends, love what you all are doing, and wishing you good luck!
We love the FIRE life hacks ideas - they're really awesome.
We adjust expenses for inflation over time, but not savings/income. It's a little more conservative that way - and we were struggling to figure out how to represent it. I agree the bank rate calculator is super clear, and it's a good source of inspiration. Thanks for sharing!
Thanks again! I really can't adequately express how appreciative we are of this fantastic support!
But I struggled to put my knowledge into practice because it was too general: I knew I shouldn’t leave money in cash, but what about the down payment for my house? I knew I should save for retirement, but how much? I knew I should be saving for my kids’ college in a 529, but how much should I contribute this year? I knew I shouldn’t pay a financial advisor, but how do you answer these questions without one?
Eventually I met Seth, a former actuary who studied economics and math at Yale. He was using simulations to determine whether he’d be better off with an interest-only mortgage or a traditional 30 yr fixed one. We realized that we could use that same approach to provide people with better insight on all sorts of personal finance decisions.
Fortunately is the first tool that really helps people understand the tradeoffs between the major financial decisions in their lives. For example, we help families understand how a bigger mortgage might impact their retirement plans, how much to save in a 401k vs a 529, and how an upcoming purchase should impact asset allocation. We evaluate everything using best-in-class simulations that we license from the same data providers that supply hedge funds and the insurance industry.
Fortunately is free to use to get a financial plan that helps you understand how to save to hit your goals. Eventually, we’re planning on charging a low monthly fee (not a % of assets) to automatically manage your investments.
We’d love to hear your feedback.
Fortunately in its current state doesn't help me at all. It wouldn't have helped me 10 years before retirement either.
You probably want to join the BogleHeads forum [2], as many of these folks could be your potential customers, but they are also your competition that gives away excellent advice for free. Look at the questions that are asked and the high quality answers and see if you can replicate them in your tool.
Claims from the FAQ page:
- Takes into account capital gains. But it didn't ask any basis information about my brokerage balance. Does it guess? What value did it use?
- Takes into account income tax. It didn't ask my breakdown of stocks/bonds in the brokerage account or in my retirement accounts. How are dividends and interest handled?
- Social Security needs to be modeled. The free open source tools at https://ssa.tools and https://opensocialsecurity.com contain the minimum that you need to model. The question "Should I work one more year?" is a common one and one you need to handle.
- Health care is not even on the list of things ignored and it's one of the biggest questions for folks retiring early. It has huge effects on federal taxes and the ACA cliff caused some folks to keep their income artificially low. IRMAA [3] is also a concern for some folks.
- There is no way to separate traditional retirement accounts from Roth type accounts which have very different tax treatments.
- A common question for early retirees is should I do a Roth conversion or should I take advantage of the 0% capital gains bracket? Modeling the RMDs and the taxes on that is complex, but absolutely necessary to properly answer this question.
- Ignoring state taxes can give misleading answers to some of the questions above. I live in a state that taxes capital gains as income, like many states. So when I take advantage of the 0% federal cap gains bracket, my state taxes can be 3-4x my federal taxes.
It looks like you are targeting younger customers that will have lots of uncertainty with how the market will go and what will happen with tax policy. Often times these customers are just as well served by the Mr Money Mustache savings curve [4] and low cost index investing.
I think the real opportunity to make money is helping with the hard problems of folks about to retire and those that are retired. Tools like RPM are difficult to use. A web tool that uses an interview process to collect the data and then writes out a spreadsheet might be a useful tool.
[0] https://www.bogleheads.org/wiki/Retirement_calculators_and_s...
[1] https://www.caniretireyet.com/the-best-retirement-calculator...
[2] https://www.bogleheads.org
[3] https://thefinancebuff.com/medicare-irmaa-income-brackets.ht...
[4] https://www.mrmoneymustache.com/2012/01/13/the-shockingly-si...
You're right that the needs of people at or near retirement (especially early retirement) are much more complex and comprehensive than those that are further from it: people closer to retirement have more types of investments and income (pensions), tax optimizing your retirement drawdowns is super important, social security relevant (it's better for younger folks not to count on it). This is part of the reason that there's a lot more whitespace in the market there – there's a lot more to build! We're planning to get there one day, but it takes time.
You're right we're targeting younger families right now. They still have plenty of questions, but their financial situations are generally much more uniform. We're big fans of the BogleHeads (it's why we use the 3 fund portfolio in our plan) and Mr. Money Mustache - they do a great job with general purpose advice, but we've found it hard to make actionable. These articles can't answer questions like how much later will I need to retire if I buy a bigger house? Or how much should I save in my 529? It's really impossible for most people to figure that out right now.
Thanks for pointing out some inadequacies in our FAQ. This is super helpful, we'll get it up to date. I'll also try to respond to everything here. Please let me know if I missed anything.
- Takes into account capital gains. But it didn't ask any basis information about my brokerage balance. Does it guess? What value did it use?
We assume your cost basis is 100% for the initial balance with the manual inputs (if you don't sync your accounts via Plaid), and we track the cost basis and tax impacts of future buys and sales when running our simulations.
- Takes into account income tax. It didn't ask my breakdown of stocks/bonds in the brokerage account or in my retirement accounts. How are dividends and interest handled?
The simulation today essentially assumes that you follow our recommended stock/bond allocation, but we're working to open that up.
We take income tax into account for traditional retirement fund distributions and capital gains. Dividends and interest payments are rolled into gains (admittedly this does understate their tax impact when the savings are in taxable accounts).
- There is no way to separate traditional retirement accounts from Roth type accounts which have very different tax treatments.
Yep, for the onboarding flow we keep things simple - we only ask for one "Retirement savings" number. But you can add a Roth account (and any other number of accounts) after onboarding.
- Social Security needs to be modeled. The free open source tools at https://ssa.tools and https://opensocialsecurity.com contain the minimum that you need to model. The question "Should I work one more year?" is a common one and one you need to handle.
Thanks the links! Super useful. We'll check them out. We don't model Social Security yet - it's tough to forecast how much younger folks should count on it, so we've left it out for now.
- Health care is not even on the list of things ignored and it's one of the biggest questions for folks retiring early. It has huge effects on federal taxes and the ACA cliff caused some folks to keep their income artificially low. IRMAA [3] is also a concern for some folks.
- A common question for early retirees is should I do a Roth conversion or should I take advantage of the 0% capital gains bracket? Modeling the RMDs and the taxes on that is complex, but absolutely necessary to properly answer this question.
Completely agreed on both. Early retirees have a lot of really complex needs that we really can't help with (yet).
- Ignoring state taxes can give misleading answers to some of the questions above. I live in a state that taxes capital gains as income, like many states. So when I take advantage of the 0% federal cap gains bracket, my state taxes can be 3-4x my federal taxes.
Handling state taxes is on the roadmap. There are a lot of states! For most of our demographic, the impact is expected to be small on the percentage change change of outcomes.
The site is for folks that are ok with a probability of success. There are folks that want better guarantees, probably annuities. Wade Pfau, who has been researching retirement planning for 15+ years has a good description of the issues in his Retirement Planning Guidebook [0] which talks about his RISA model. Looks like he's now productized it at [1].
I looked at the asset allocation recommended over time, and I think that should be adjustable based on the users level of risk.
I like your guide concept, but the content feels pretty generic. I think any product in this space needs to have a big emphasis on educating the user about the issues. I would like to see this integrated into the calculator better. Maybe a report that lists the issues that the product handles, then customizes the list for this particular financial plan showing if and when in the plan the issue applies and gives further resources to learn about the issue. Order it by when, so the customer has a financial issue learning plan.
In the education theme, the product is making lots of unstated assumptions now, and it makes it hard to interpret the output. As my teachers (and probably your teachers as well) said, ALWAYS state your assumptions.
Another way you can make your product more usable is to figure out what the top questions your customers want to answer and then build guides to show them how your product answers that question. I see you've got a part time position open to figure out customer needs, this could make it easier to close a sale. It may be possible to go through the forums at various groups like Mr. Money Mustache, Bogleheads, etc to find common questions.
Speaking of education, the algorithm needs to be well documented. Otherwise it could be based on a random number generator for all I know. Is it based on historical market data? Or is it Monte-Carlo based? If it's MC, then what data is generated and how? Is the data different on each run, or is it the same MC data used for every run for all folks (essentially treated the same as generated historical data.) Jim Otar has some good comments about MC in his book "Unveiling the Retirement Myth" [2]. He's not a fan of most Monte Carlo data generators, but gives a set of tests that any good MC generator should pass. He's a fan of using historical data. Karsten (a retired economist) at Early Retirement Now [3] has done quite a bit of work on Safe Withdrawal Rates using historical data above and beyond what Began has done.
Have you used Financial Engines at all? It was around a dozen years or so ago much like what you are building that William Sharpe was involved in. They tried to partner with 401k providers to offer it as an upsell to large companies. I have an old 401k that still has it. They started as a tool for the DIY, but pivoted to managing your 401k for a percentage of assets.
A recommendation for you is to make the initial onboarding a big more clear as to what type of account and whose account it is for those that are married. Getting quality data here will help for the features I am going to suggest.
Some feature suggestions for you to think about that could be competitive differentiators:
1. Help estimate life insurance needs for folks. There are a number of approaches, income replacement and expense liability matching are a couple common ones. This is a feature that your competitors don't have and fits with the demographic you are targeting. There is a lot of opportunity for education in this area. There is the opportunity for referral income by referring folks that truly understand their insurance needs and are ready to buy.
2. Different forum communities have standardized formats for background data for asking questions. Make it easy to get your data in that format for asking a question. This would mean engaging more with those communities.
3. It looks like the plans go out to about 100 years old. Open Social Security uses five different mortality tables to estimate life expectancy or an entered age, which can tune a plan to meet someone's situation much better.
4. Forced early retirement. It's happened many times in the past and likely will again.
5. Divorce. This is a tough one, but it's fairly common these days, and throws a real monkey wrench in financial plans. The rules differ per state making it lots of work. Some have fairly clear rules that could be implemented, others are kinda up to the judge. Real World Divorce [4] may be usable as a survey to get a feel for the scope of the different rules.
I'd like to object to your statements "social security relevant (it's better for younger folks not to count on it)" and "it's tough to forecast how much younger folks should count on it, so we've left it out for now" It's really easy to handle this. Look at how Open Social Security handles it. There is a year and a reduction percentage. He fills in defaults from the Social Security Trustee report, since they are required to estimate it based on current law. For younger folks the year probably doesn't matter, since it will happen before they withdraw, just the percentage matters. This is an opportunity to educate folks rather than perpetuate the fear that it won't be there for them. For many of them it will probably be their largest income source in retirement even after the reduction.
I don't think the complexity of the questions that early retirees have like Roth conversion or 0% cap gains is any more complex than the buy a bigger house question. Look at the complexity of the NYTimes Buy vs Rent calculator [5]. I suspect the buy a bigger house is similarly complex when you really dig into it.
Happy to answer any other questions you have.
[0] https://www.amazon.com/Retirement-Planning-Guidebook-Navigat...
[1] https://risaprofile.com/risa-how-it-works/
[2] https://www.amazon.com/Unveiling-Retirement-Myth-Jim-Otar/dp...
[3] https://earlyretirementnow.com/safe-withdrawal-rate-series/
[4] http://realworlddivorce.com
[5] https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...
Some selected responses.
| 1. Help estimate life insurance needs for folks.
Yes! This is completely on vision and part of why we founded the company (my co-founder is an actuary). We have plans to do a gap-analysis style life insurance recommendations - your needs decrease as your savings grow. He's written on right-sizing your insurance (though income replacement style) at the white coat investor [0].
| Have you used Financial Engines at all?
Yes! I actually worked (indirectly) with Bill Sharpe early in my career, and one of the founders of FE is an advisor of ours.
| Is it Monte-Carlo based? If it's MC, then what data is generated and how?
Yes. We license our simulations from the same place that many hedge funds and the insurance industry get theirs. It's the best in the business.
| Look at how Open Social Security handles it. There is a year and a reduction percentage. He fills in defaults from the Social Security Trustee report, since they are required to estimate it based on current law
I didn't know. Thank you, this is super helpful and informative.
| Open Social Security uses five different mortality tables... Forced early retirement.
Yes! This is also part of the core product vision. It's just a bit tricky in practice to communicate in the product, so we haven't incorporated it into the product yet. Will check out Open Social Security.
It seems like you really understand our vision. Again, I'd love to chat in real-time if you're willing - you have a lot of wonderful insight and I'd appreciate being able to discuss some of these things in more detail.
[0] https://www.whitecoatinvestor.com/layering-life-insurance-po...
We'll work to make the product landing page better.
As an aside, I've been wanting a financial service that keeps tracks of all my assets AND doesn't compromise on privacy or try to upsell me. I'd be willing to pay for that.
We do this! "I've been wanting a financial service that keeps tracks of all my assets AND doesn't compromise on privacy or try to upsell me." Is there something you feel we're missing?