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. In 2024, they crossed 4,000 users! PhysicianonFire has sent hundreds of users to Projection Lab. I really enjoy this software.

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?

 

TL;DR

 

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%.

 

 

 

Stock/bond allocation

 

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 🎉