The Optimal Retirement Calculator
is the Optimal Retirement Planner

Optimal Retirement Calculator is a Decision Support System

The Optimal Retirement Planner (ORP) or optimal retirement calculator can be an element in your retirement financial planning. Recently, I have come across this tool that is worth evaluating in your search for a retirement calculator to assist in your planning, especially for optimal asset distribution during retirement.

The ORP was developed by James S. Welch, Jr., who has been a full time, professional computer programmer since he started on UNIVAC I in 1954. He concentrates on special purpose database management system development, large database accounting applications, and large scale mathematical programming systems.

He developed the Optimal Retirement Planner (ORP), a linear programming (LP) based retirement calculator.  ORP demonstrates the making of a computationally intensive application composed mostly of industrial grade, commercial mathematical software available to the retail market over the Internet.  ORP has developed a cult following of users that find it useful for the strategic planning of optimal asset distribution during retirement.


© James S. Welch, Jr

In a discussion with James, I asked him to provide a description of ORP for our readers. He developed the following summary:

The Optimal Retirement Planner (ORP) is a Decision Support System intended to illuminate retirement financial planning and to debunk the myths and half truths that are the currency of the field. ORP provides guidance for:

  1. Pre retirement: How much to save in which retirement account.
  2. Post retirement: The order to drawdown which retirement savings account while minimizing taxes and meeting IRS regulations.

The process is easy:
  1. In the ORP parameter form Fact Section specify the facts of your current situation; age, IRA balance, Social Security Benefits, etc.
  2. In the ORP parameter form Choices Section specify your retirement plan choices; age to start social security, the amount of contributions to retirement savings; life expectancy, when to sell your house, etc.

ORP turns this into a Linear Programming model and solves it. Linear Programming is an Operations Research technique that began in the 1950’s to model oil refineries. It is still used for that application but has grown to include many more, including retirement financial planning.

ORP runs in two different modes:

  1. Simulation Mode: ORP generates a retirement plan for your particular set of choices.

    1. ORP computes the maximum amount of after-tax, inflation adjusted money available for spending in each year of retirement. This is a single number that summarizes your entire retirement picture. Because ORP is an optimizer there are no better solutions – guaranteed.
    2. ORP’s Withdrawal Report shows the cash flow that yields this result.
    3. Other ORP reports show the flow of money into and out of your retirement savings accounts and show the progressive income tax picture throughout retirement.

  2. Monte Carlo Risk Assessment Mode: Demonstrates how your particular set of choices will behave in an uncertain economic environment.
ORP’s simulator is fundamentally different from retirement calculators because:
  1. ORP computes an optimal retirement savings schedule showing which accounts to save in before retirement to maximize withdrawals during retirement.
  2. A retirement calculator user specifies how much to withdraw each year and the calculator computes when the money runs out – age of ruin. The ORP user specifies her (couple’s) life expectancy and ORP computes the amount of money available for annual spending.
  3. ORP adjusts the retirement plan with income from post retirement employment.
  4. ORP models the progressive Federal and state income tax.
  5. ORP models the Federal Minimum Required Distribution requirement.
  6. ORP flows money from the IRA to Roth IRA and after-tax accounts to maximize money available for spending.
  7. ORP withdraws money from the IRA in parallel with the other accounts rather than the conventional approach of exhausting the after-tax account, IRA and Roth IRA in that order.
  8. ORP models the sale of an illiquid asset (home) late in retirement.
  9. ORP models Ty Bernicke’s Reality Retirement Planning in which withdrawals are biased toward the early retirement years when the retirees are the most active.

ORP is available on the Internet for no charge. Click her to visit the Optimal Retirement Planner at


© James S. Welch, Jr

We would like to thank James for his summary of the optimal retirement calculator he has developed that will provide more information to individuals as they work through their retirement financial planning.

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