Coming soon -- The Wealth Depletion Time Game?

Since I've sunk so much time into this WDT thing, I thought I'd try my hand at instantiating it in some real numbers and some software just to see what it's like to play around with.  A few hours of Excel and we now have a "WDT Game" prototype. It looks like this so far:

I'm not releasing this yet though and that's not out of some kind of proprietary-secrecy-concern thing. Rather, I'm still too early here and there are some things I'm worried about.  For example:


- It's too complex and untested to roll out yet
- I'm pretty sure I have some errors and omissions...and extreme parameters still break it
- The whole point of WDT is utility and I have no utility...yet
- I really should have other income like SS and pensions but don't
- I'd like to have a variable start age but don't
- it's a wee bit reductive (but hey, it's just a game)
- I'd like to be able to inflect spending along the retirement path, like in my own plan, and
- some other concerns...

But given that, this is pretty interesting stuff and I think it (the game) fairly reflects the processes I was studying. Here are some highlights:

- it of course has a net wealth process
- it has no income except what is purchased via a fair but loaded annuity
- wealth drops by the amt of a fair annuity x load factor using SOA data for age of purchase
- spending grows with inflation...plus a trend can be added, too
- spending drops to purchased income when wealth runs out (the whole point of WDT analysis)
- wealth is forced to zero at WDT to avoid some odd residual wealth effects

Conclusions

This is not really a "conclusions" type of post but playing around with this thing forced me into it.  There were so many counter-intuitive things that happened when I played with this that I couldn't keep track of them. I believe that this is a fairly built tool (for what it is anyway) that more or less reflects the processes I was trying to model so the game results kind of threw me off a bit.  I can't think of anything I've done in the last 2 years that makes a more powerful case for the idea of purchased lifetime income.  Really weird stuff happens at different ages and different levels of income-purchase along with all the other variables for returns, fees, inflation, load factors, and trends. I'm really interested now to see what happens when I layer on utility math....which I might actually not do because I am not a big fan of utility.

Post References

For any one of the three readers that seem to be interested in this, here are the series of posts I did on this, going backwards in time:

• Wealth Depletion Time - Commentary
• Is this an easy "Wealth Depletion Time" analysis method by proxy?
• Wealth Depletion Time - Selected Excerpts
• Wealth Depletion Time - Adding again to my pile with Leung '94
• Wealth Depletion Time - an Hypothesis and a Self-Challenge