Do you have a concept of what your financial future looks like? ProjectionLab is a powerful tool that can help you visualize your investments, expenses, and more over time under all sorts of different scenarios.
It’s like Empower’s Retirement Planner on anabolic steroids.
I’ve played around with it a little bit, but no one knows this tool like the man who created it, Kyle Nolan. I’ll let him show you around as he walks through some different scenarios.
You can use the “sandbox” version for free, and if you choose to upgrade to the premium version, this site may be credited with a referral. To entice you to do just that, Kyle is offering 10% off the paid version of ProjectionLab with code POF-10.
Kyle, take us into the lab.
Hey everyone, I’m Kyle. I’m a software engineer from Boston who likes to scuba dive… but not here, because murky water is scary 😅
Before I found the financial independence movement, I quietly grappled with the feeling that there should be more to life than the classic American pattern of working until you’re too old to enjoy it.
Devoting your most energized and inspired hours of the day to meetings, briefings, and bureaucracy can’t be self-actualization, right? And I’ve witnessed how lifestyle inflation, bad planning, and unforeseen events can keep people trapped in that cycle for all their best years.
When I first discovered the books and blogs of FI community legends like J.L Collins, Pete Adeney, Morgan Housel, Grant Sabatier, and Leif of course, their collective message hit me like a ton of bricks.
I knew I needed to really take control of my life, rather than just dreaming about when I’d have enough PTO saved for another diving trip. I wanted to know that someday I could have the freedom to be my best self all the time, not just a few weeks a year.
Building a personal finance simulator
As I learned about leanFIRE, fatFIRE, regular FIRE, and the other variants, I wanted a visual way to map out all the options and explore the trade-offs. I went looking for a good long-term planning/forecasting tool. Something modern, fluid, nuanced, and actually fun to use. But then apparently I blacked out and spent all my free time for the past two years building a new one instead… oops 🙃
So, fast-forward about 700 cups of coffee and a couple thousand hours of coding on nights and weekends, and let me introduce ProjectionLab.
You can create beautiful financial plans with a level of nuance and flexibility that exceeds the standard online retirement calculators, run Monte Carlo simulations, backtest on historical data, review detailed analytics for estimated taxes, plan how to live life on your terms, and with any luck, reduce anxiety around your finances.
There’s a free sandbox if you want to quickly see how it works, it does not ask to link your financial accounts, you don’t have to create an account to try it, it works pretty well for international scenarios, and it respects your data.
^ Ah yes, marketing speak, how lovely… sorry, I’ll knock that off! 😬
A little more backstory
Ever since I was a kid, I’ve had a passion for making things. In elementary school, I remember learning excel so I could create a (terrible) trading card game and attempt to sell packs to friends. In middle school, I started coding video games, and since then I’ve always had a personal project or two on the side.
There’s nothing that matches that feeling of taking something that’s just an idea in your head and manifesting it in the real world. It will always feel a little like magic. And with side projects, it’s refreshing and liberating to have full creative control, no stand-up meetings, no sprint retrospectives, no changing requirements, and no funding to worry about. Just pure creation, uninhibited 🌈
So as I’ve built out ProjectionLab over the past couple of years, my own projections are often centered around the question: how can I plan a life where I can meaningfully pursue these kinds of fulfilling creative outlets and passion projects without taking on too much risk, and balancing that with other life goals?
But enough about me! What can you actually do with this tool?
Here’s a quick breakdown. ProjectionLab allows you to:
– Plan separately or as a couple
– Create multiple plans and compare them
– Build dynamic configurations based on goals like achieving financial independence, taking time off for travel, home ownership, or starting a rental empire
– Review estimated taxes and effective tax brackets for each kind of income
– Visualize projected cash-flow with Sankey diagrams
– Create granular models for how you expect accounts/income/expenses/inflation/etc to change over time
– Experiment with Roth Conversions, 72t (SEPP) Distributions, and other advanced strategies
– Model international scenarios
– Backtest on historical data and run Monte Carlo simulations
– Track your actual progress over time
– Control where your data is saved, with no link to your real financial accounts
Flexible and dynamic planning
In ProjectionLab, the concept of milestones is front-and-center. When you’re making a plan, these are the big picture goals and events you care about. They are flexible and customizable, and could be anything from retirement or purchasing a home, to reaching your personal definition of financial independence, having kids, moving to a new state or country, etc. They can even have tax consequences.
Many people define concepts like financial independence differently, so I wanted the milestone system to accommodate that. For instance, do you only consider yourself FI at a specific multiple of expenses and a certain liquidity-to-debt ratio? No problem: you can create a milestone with multiple criteria.
Where things really start to get interesting is when you flesh out a plan with several income streams, expenses, asset purchases/sales, and cash-flow priorities, and then use your milestones as dynamic bindings to control when things in your plan start and stop.
To see this in action, let’s build a scenario together!
Let’s make a plan
How about this: we’ll pretend to be an early career married couple with student loans, moderately high income, currently renting in an HCOL city, interested in financial independence, and trying to figure out what the future might hold.
Within the Current Finances section, we’ll start out with a negative net worth due to the sizable debt load:
To make projections for the future, we’ll create a plan, define growth rate and inflation assumptions for the deterministic planning mode, add milestones, income streams, expenses, and cash-flow priorities, choose our tax configuration, set a portfolio-level stock/bond allocation over time, and define a drawdown sequence.
In the interest of time, we’ll gloss over that setup process.
Starting out simple
To keep things approachable, here’s what a basic version of our plan might look like. It includes two kids, straightforward career progression, contributions to some employer-sponsored retirement accounts, buying a car every 8 years, medical expenses increasing later in life, and some unexpected emergencies occurring every 15 years and scaling up a bit each time.
Let’s define Financial Independence as a milestone that occurs when net worth reaches 25 times expenses:
And in this scenario, we’ll set retirement to two years after FI for a little extra buffer or perhaps a mild case of “one more year” syndrome.
Now that we’ve created these milestones, each event in the plan has access to them and they can be used to control when things start and end. For instance, this W2 income stream will end when the retirement milestone occurs.
And we’ll bind expenses for the kids to milestones as well. This way, any tweaks we make later to our milestones will propagate to everything else in the plan automatically.
Visualizing cash flow
So, what does the accumulation phase look like? The Sankey chart in the cash flow view illustrates how money flows in and out during each simulated year.
We can see how earned income (less withholding) flows into the plan, along with employer match/contributions to tax-advantaged accounts, and how these inflows are used to pay for expenses, service debt, contribute towards investments, and build an emergency fund based on our ranked cash flow priorities.
In later years during the drawdown phase, we see some estimated RMDs and additional qualified withdrawals used to pay for expenses, which have grown considerably since earlier in the plan. (Our baseline scenario models some lifestyle creep).
Exploring tax analytics
We can also use the tax analytics module to drill down on specific years and examine how the various kinds of estimated taxes and their underlying brackets apply to each income type.
You can plot marginal and effective tax rates over time, and also see how extra hypothetical dollars of each kind would be taxed.
The spectrum of possible outcomes
But wait… so far we have just been using static rate of return assumptions, right? That’s true; in the deterministic planning mode, we’ve been assuming a consistent 5.34% real rate of return.
What if we want to battle-test this plan against the kind of market volatility you can expect in the real world? That’s where backtesting and custom Monte Carlo simulations can be helpful.
Using historical S&P 500 returns, dividends, US inflation, and bonds data, a quick backtesting run suggests that our plan has a high probability of success.
But is the life we’ve modeled so far really the one we want?
Reaching FI around age 50 after nearly three decades of full-time work may be an accomplishment from a traditional retirement planning perspective, but what if we’d like to stop working full-time a bit earlier to make more room in our lives for family, hobbies, and passion projects during some of our best years?
Planning our best life
Let’s create a new plan and find some ways to get creative. We’ll start by cloning and renaming the original.
This time, we’ll be more intentional about our spending. Using the Advanced change-over-time editor, we can create a custom curve to model how we think our essential living expenses are likely to evolve over time.
We’ll also stop renting and buy a modest house for $500k around the time Kid #1 is born. Then, one of us will drop down to part-time work at age 40, and we’ll both retire from our W2 jobs at a fixed age of 45.
What does all that do to our chance of success? Hmmm… version 1 of the Dream Plan is looking risky.
But what about those hobbies and passion projects? Maybe one of those grows into a small side business and starts generating some revenue around the time we retire.
That extra income smooths out those early years after retirement and brings the success rate back to a pretty reasonable level near 80%.
In our original plan, we gradually built up to a bond allocation of 40% by age 60. But what if we decided to invest a bit more aggressively in equities? (With firm resolve to stick to our investing policy statement and not get spooked by bear markets).
Based on the historical data, that tweak actually elevates success rate into the upper 80s, even when running a more exhaustive Monte Carlo simulation with more randomized sampling and a higher number of trials.
Want to learn more?
At this point, we have only scratched the surface of what you can model in ProjectionLab, but I’m starting to feel bad for whoever has to embed all these screenshots into the final post!
To learn more, here are some links you can check out:
- The tool: https://projectionlab.com
- Podcast appearance on The FI Show
- A recent video review by Rob Berger
You can run basic simulations for free with the sandbox version, and you can use this coupon code for 10% off the premium version: POF-10 🎉
10 thoughts on “Plotting Your Financial Future in the ProjectionLab”
I’ve been playing with this for an hour or so, and it is very impressive and informative. I used last year’s expense numbers, and the simulation showed me going bankrupt at age 75! But last year I had some unusual expenses, so it is a bit of an outlier, and I expect my expenses to go down as my kids move out and we downsize from our McMansion. This tool makes it easy to see how the pieces all fit together, and the Monte Carlo simulations are pretty reassuring in my case. I am very tempted to get an account and play some more!
How do you add investments like MLG Capital or a syndication? How do you ensure the proper estimated IRR/MOIC is incorporated?
Curious about RMD assumptions. For some reason, trial plan didn’t start my spouse’s RMDs until age 76, whereas Secure 2.0 will require them at age 75. New Retirement and Personal Capital models seem to work better.
Hey Jim, I wonder if this might come down to how to parse the simulation year boundaries / age labels and the timing of when distributions are actually due. If you’d like any help troubleshooting, feel free to send me an email ([email protected]) or reach out on the PL discord.
Is there a planned upgrade to be able to link or connect accounts (like with Personal Capital) so values get updated automatically?
That’s one of the items on the public roadmap, if you’d like to give it an upvote. It’s currently still in the Suggestions category because it’s a bit of a contentious topic which we’ve had a few discussion threads about in the PL Discord.
In the past, I’ve tried account linking in some other tools, but always ran into syncing issues. From what I understand, that’s still pretty common even with solutions like Plaid.
With PL, I wanted to initially steer clear of that support/maintenance tar pit (especially since I’m a solo dev), and design a tool where the focus is more on long-term projection rather than tracking all the latest daily stock price fluctuations.
That being said, I do plan to take another look at syncing services later this year and see if there could be a reasonably low-friction way to integrate one of them.
This is the best personal finance calculator I’ve come across on the web so far. Well done! So many moving parts it takes a while to get your head around it, but worth it overall. I subscribed for lifetime membership thinking of it similar to a less expensive long term financial adviser in terms of capabilities but faster to respond to new inputs. Kyle has been really responsive with a few suggestions in the past as well.
Thanks NH, really appreciate the support!
Building PL has been a lot to take on as a solo developer. But it’s a blast to work on, so all the nights and weekends don’t really feel like work. I think the next question is: when does it outgrow being a side project? 😉
Wow! Can’t wait to start messing around with this tool. Very much an improvement on what I’ve seen so far. Thanks
Thanks Robert! If you have any questions, suggestions, or new feature ideas, feel free to reach out any time. I monitor the PL Discord community the most closely, but periodically I’ll check back in here in the comment section as well.