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When I discovered the (FIRE) Financial Independence Retire Early community, I was motivated to finish my debt pay off journey so I could start maxing out my retirement accounts. I may be a late gamer but I’m good at intensity. I’m now maxing out my retirement accounts, living debt free, and ratcheting up my savings rate. I’ve done the calculations and I estimate that I can hit financial independence around 59 or 60. However, factors in life change so when I was introduced to OnTrajectory Retirement calculator, I realized this was a tool that accounts for the dynamic factors of life.
Necessity is the mother of invention
Let me introduce you to the guy who created this A M A Z I N G tool. His name is Tyson and he has a pretty cool backstory of how he came to create OnTrajectory. Tyson had been looking for a financial planning tool for decades which would update income/expenses over time, track progress, and provide visual feedback.
Tyson realized, after his second daughter was born, in 2013 that they needed a bigger house, a second car, another college fund, two more years of daycare, and the list goes on and on. He had no idea how to “safely” spend on those things. Additionally, he wasn’t sure what these new expenses would do to his plan to become financially independent. There was still no such tool in existence, so he did what any good software engineer would do and he built it! Huzzah!
Becoming an Entrepreneur
Let’s back up and see where Tyson first got bit with the entrepreneur bug. Tyson’s first go around with becoming an entrepreneur was when he was 13 and started a snowball stand.
“Apart from learning how to deal with inventory, cash flow, and the crushing boredom of sitting alone for hours — the biggest lesson I learned that summer was I LOVED being ‘financially independent'”. -Tyson, CEO, OnTrajecory.com
With the money he earned at the age of 13, Tyson bought his first computer and taught himself BASIC. According to Tyson, that began his life-long love of tech and programming.
One would think that Tyson would go onto to study computer programming, right? Wrong. Tyson studied English and Philosophy in college as he was in his “artsy” phase of life. He tended bars in various restaurants and played in several bands. When he graduated with no real job prospects (wait, there were no jobs for philosophizing??), he got back into IT. Fortunately for us, Tyson spent the next 20 years and a programmer, architect, analyst, project manager and ultimately the director of a small company.
The thought process behind OnTrajectory
OnTrajectory was built to fill an individual need which I would argue might be the best reason to build something. If you see a gap and build a tool to bridge that gap, you probably have a useful product…without trying to create a product. After all, when one person is experiencing a gap, chances are there are thousands of other people in that same gap.
“For me, having a plan – even one that may forecast spots of potential danger – it gives me this overwhelming sense of well-being because I can SEE what is going on, it takes away the terrible feeling of not knowing – it’s helped to de-stress and reduce anxiety in my life overall. It’s just a great feeling of having a solid and predictable plan for the future!” –Tyson, CEO, OnTrajecory.com
He wanted something that would be able to answer the question, “when will I be fully financially independent?”
His approach to building it has been centered around the user experience. He created a tool designed to help regular people answer potentially complex questions about their own financial journey. Tyson is very passionate about the mission and loves working on this tool. He has experienced an overwhelming sense of well-being and joy in knowing he has a solid plan and that the major question marks of his future are answered! His hope now is to provide that to others as well.
Getting started with OnTrajectory
So now I’d like to walk you through some of the basics of getting started with OnTrajectory. The purpose of OnTrajectory is to guide you in crafting a plan to see where you are likely to be based on your assumptions. Additionally, it is designed to bring an understanding of how the decisions you make today will affect you years into the future.
Furthermore, you can visually see the impact in tweaking certain expenses, like packing your lunch every day versus buying, and how they affect your retirement savings.
Sometimes, myself included, we go through life without awareness of how our spending habits affect our future. Tracking & planning allows us to be intentional. OnTrajectory is a tool in which to do that.
Entering your data
When you sign up for your free 14-day trial, you’ll be required to enter some data. You can do the minimal here and tweak as you get more comfortable in paying around with it. There are two options for entering data:
- Guided Entry
- Quick-Start Wizzard
If you choose the former you’ll be asked to enter more data in a step-by-step fashion such as income, expenses & accounts. This way is a more comprehensive approach and what I chose to do. It was never daunting as the program guides you through it.
If you choose the latter, you’ll only need to answer 3 questions (current savings, current annual income, average you save each month) and the program makes assumptions about the rest. This is definitely the quicker method and recommended if you’d rather just get started and tweak later.
Either way, you control your data and can adjust it at any time.
During your 14 day trial period, you’ll receive one tutorial style email per day to cover the different topics. Most of the emails come with a brief video that you can watch and learn.
You are able to set a retirement age and an end age. For me, I’m planning on retiring at 60 and living until I’m 100, at least. 😉
However, you can pick whatever numbers apply to you. Furthermore, inflation is set at 3% but you can adjust that too.
In all my retirement calculations pre-OnTrajectory, I’d been leaving out Social Security Income. This is probably good because we never know what changes can occur here; however, I’m closer to receiving it than the millennials so there is a good chance it’ll be around for me. OnTrajectory lets me see the impact of taking my SSI at 62, 67, and 70. Several months back I wrote a post about SSI and pondered if taking SSI benefits earlier (62) would allow me to do more in retirement.
Interestingly, the math suggests otherwise and I could see this black and white in OnTrajectory. Math always wins! Of course, this is with the assumption that I live a long healthy life. One never knows and so we make choices based on the information we have at hand.
The nice thing about expenses is you can pick a starting and end date. For example, you won’t have a mortgage forever. Additionally, your healthcare expenses change when you go onto Medicare at the age of 65 so you can create a medical expense category which spans from now until 65 and then another one for 65 and after.
In regards to spending frequency, you can select monthly, annually or variable. If you choose variable, you’ll enter a percent in the amount category. This could be useful if you are looking to cap your expenses in retirement to say 4%.
OnTrajectory allows you to group several expenses together so that they show as a single line item. For example my credit card monthly expense consists of the following:
Accounts & Taxes
Here is where the fun stuff comes in…your retirement and investment accounts. You’ll be able to enter as many accounts as you have but the top one is special and cannot be deleted. The top account is where you set your tax percentage for pre and post-retirement. Additionally, it’s used first when expenses exceed income (i.e. drawdowns). Furthermore, when Required Minimum Distributions (RMDs) occur, this is the account that receives them.
As you can see there is a Growth column. When I’ve done my retirement calculations in the past I’ve often used 7% for my rate of return. However, knowing that I’ll adjust my asset allocations to be a bit more conservative as I approach my wealth preservation phase I knew that % should be smaller. After talking to Tyson on this point, I chose 5.5%.
You’ll also see that when I stop contributing (age 60), it becomes even more conservative at 3%.
Below are the types of accounts you can add:
Depending on which account you choose, the appropriate tax is automatically assigned to it (however, you can manually change it):
- Tax-deferred (gains only)
- Tax-deferred (contributions only)
This non-accountant is glad the program is set up to choose the appropriate tax. Trust me anyone can use and figure this tool out! Furthermore, the daily tutorials are very informative if you want to dig deeper.
You can set certain financial goals into this program as well:
I set a goal of having $602,000 on this DATE and the program calculated at the rate I’m going, I should achieve this by September 27, 2030.
Moreover, you get a nice visual of your goal on your graph if you check the show box. My goal is shown on the graph below as the red #1. You also can have multiple goals.
Ideally, you’ll want to be updating your data and tracking your progress several times a year. I just set a reminder in my task manager, Todoist, to update my data & progress quarterly.
I just updated my progress by going to the progress tab and updating the balances of all my accounts. As soon as you start tracking your progress, a green area is added to the graph.
See, I’m on track!
Granted it’s only been three weeks since I started. 🙂
Some other cool features
Are you the type of person who wants to see the data? No problem, they’ve got you covered. To see your data, you’ll just hit “show data” for the specific tab you are under and you’ll see a glorious sheet of the math. Here is my account data (BTW, I’m feeling kinda naked here):
OnTrajectory offers three different analyses:
- Average Growth
- Monte Carlo
Average Growth is the default analysis. Monte Carlo visualizes the likelihood that you’ll be successful with the trajections you’ve defined. Historial uses, um you guessed it, historical data and does it sequentially.
Keep in mind that these analyses are not perfect but do give you a pretty good idea of your potential successes.
When I run the Monte Carlo analysis, here are the results:
It’s a pretty graph! Most importantly, my chances of success right now are at 100%. I’m comfortable with that.
When you log into your account you have a dashboard the far right which will show you:
- Final Trajectory
- Projected Progress
- Peak Assets
- Warning (you want this to be a thumbs up)
Here are a few examples with warnings:
And here is an example of a dashboard with a thumbs up:
OnTrajectory has given me much more confidence about my retirement plan. Additionally, I’m able to tweak the data points as the factors in my life change and get visual results. I agree with Tyson in that having a solid plan, which takes the guesswork out, provides a certain peace of mind.
We can never predict the future exactly but we certainly can plan well for it. I will continue to use OnTrajectory as a tool in my retirement planning.
How about you? Does this seem like a tool you’d utilize? Moreover, would you find OnTrajectory coaching useful?