Retirement planner – does it factor income from assets?
Summary:
- The user is unsure if the Fidelity retirement planner includes estimates of future dividend and interest income from various investment vehicles, or if they need to manually add these estimates.
- Fidelity confirmed that dividend and interest projections are included in the retirement planner’s methodology, which uses a Monte Carlo simulation approach.
- The planner’s calculations are approximate and based on assumptions about future market conditions, asset growth, and personal situations.
- Manually entering additional income estimates could result in double counting since the tool already factors in reinvested income and dividends.
- A detailed breakdown of the retirement planner’s methodology is available through the “Help & Methodology” link on the planning page.
Here’s the full thread
just want to clarify something – when making projections, does the fidelity retirement planner include estimates/projects of future dividend and interest income form ETFs, MMF, stocks, treasuries (based on current numbers and then some calculations for future) or is that zero? OR should I include manually include some estimate for expected income from these holdings??
I didn’t see any explanation/comment about this in the info…
Thanks for hopping on Discord to clarify, @jjkagenski!
To confirm, dividend/interest projections are essentially accounted for within the methodology of our retirement planner. Please keep in mind that the tool’s calculations are approximate, as is much of the information entered into the tool. Much of this information is based on what we know today but also reflects assumptions regarding how situations may change in the future. These assumptions cover future market returns, inflation, income, asset growth, tax assumptions, and certain assumptions about your personal situation.
As a result of the Monte Carlo simulation-based approach, our methodology assumes the reinvestment of interest income and dividends. This is because the historical performance analysis considers a range of potential returns for each asset class, including their volatility, correlations between them, and other factors that use benchmark returns from third parties, not your actual investments. Therefore, if you manually enter additional data to account for your anticipated dividends/interest income, you may be “double counting.”
You can also check out a detailed breakdown of our tool’s full methodology by clicking the “Help & Methodology” link towards the bottom of the fine print on the retirement planning page. I’ve also linked it below. Be sure to toggle from “Overview” to “Methodology.”
Retirement Analysis Methodology (login required): https://myguidance.fidelity.com/ftgw/guidance/customer/guidanceLanding.go?route=HM
If you have any other questions regarding this or anything else, please let us know! 🟢
thanx!