MaxiFi: Smarter Economic Financial Planning for Real Life

MaxiFi’s economics-based approach to financial planning, based on Nobel-prize winning principles, gives you clear information to make smarter, more confident decisions.

Take Control of Your Lifetime Financial Plan

Conventional financial planning software is too rigid. Based on generic “Rules of Thumb” and the Replacement Rate method giving you simplistic “guesstimate” targets for spending and saving. You need a more accurate approach, based on economic science and built around your individual circumstances.

Conventional Financial Planning Software

Reliant on generic “Rules of Thumb”

Asks you what you think you need to spend (guesswork)

Often requires a financial advisor as middle-man between you and your plan

Rigid models cannot fully account for tax implications across your lifetime

Often leads to over-saving or under-saving

MaxiFi’s Economics Approach

Based on Nobel Prize-winning economic science

Analyzes your entire financial situation holistically

Gives you direct control, with flexible, data-driven tools

Optimizes tax strategies across your lifetime

Maximizes your sustainable living standard

The Economics Approach: Consumption Smoothing

In the early 1950s, Nobel Prize-winning economist Franco Modigliani and his colleague Richard Brumberg developed a groundbreaking theory called the Life-Cycle Hypothesis of Saving and Consumption.

What does that have to do with you? Well, this common-sense theory recognizes that you want your living standard to remain the same over the course of your life. You don’t want to splurge today and starve when you retire. Nor do you want to miss out on enjoying life while you’re still young. Economists call this “Consumption Smoothing” because households want their discretionary spending to remain the same over time.

In short, the goal of most households is to find an affordable level of spending they can sustain for life.

It sounds simple, but when you sit down and try to calculate that sustainable level, it gets extremely complicated, especially if you’re relying on spreadsheets or conventional tools.

The Economics Approach in Action

If you’ve ever tried to calculate your highest affordable spending level using outdated conventional tools or spreadsheets, you’ll know it’s virtually impossible. Your income and expenses change every year. Your income affects taxes, taxes affect spending. Social Security benefits and retirement account withdrawals affect income, which affects taxes, and on and on.

This is where MaxiFi comes in. With MaxiFi, you can correctly calculate the highest annual spending level that your household income and assets can support, helping you sustain and protect it for life.

MaxiFi uses iterative dynamic programming methods developed by our founder and CEO Laurence Kotlikoff. These methods are similar to those used in bioinformatics and aerospace engineering––or, put another way, actual rocket science. It's why MaxiFi software is the only software powerful and accurate enough to put the Economics Approach into action.

Lifetime Financial Planning with Control and Flexibility

Nobody cares about your finances more than you, so why would you put up with financial planning that doesn’t give you all the information you need?

Conventional financial software gives you a projection with a percentage chance of hitting your goals, but an 80% chance of success means a 20% risk factor. Instead, MaxiFi puts you in control. MaxiFi lets you run and compare hundreds of scenarios yourself using economic theory and sophisticated algorithms.

What does that mean in practice? You just enter your financial information and MaxiFi shows you the highest amount that you can spend each year, a plan for managing your assets, life insurance suggestions, and much more detail about your financial future.

Then, use MaxiFi's optimization engine to find the best Social Security filing strategy for the highest benefits, determine the optimal Roth Conversion strategy, and more.

Your Plan for a Lifetime

Whenever your financial situation changes or you’re facing a decision that could affect your finances, simply return to MaxiFi, adjust your inputs and assumptions, and see how your plan is impacted.

This is why MaxiFi is different from conventional financial planning software. By calculating your income and mapping out hundreds of scenarios, MaxiFi helps you assess different plans and risks.You can break down your finances year by year and make a real lifetime plan based on economic science, not guesstimates.

Economics is in our DNA

As well as consumption smoothing, economic research and insights are woven throughout MaxiFi. How? Take these three key economic principles:

Inflation matters: Results in today’s dollars

The only way to intuitively understand how much money in future years is “worth” is if we talk about it in terms of “today’s dollars.” $100 in 2050 will not buy you the same bag of groceries as $100 today. That’s why MaxiFi’s reports are always shown in today’s dollars.

This is a common sense principle of economics. Make decisions without that adjustment and that future income looks misleadingly large. That’s why MaxiFi’s reports are always shown in today’s dollars.

Investing: Make comparisons based on present value

MaxiFi also shows “present values” when comparing lifetime numbers by “discounting” future dollars. Essentially, you can invest a dollar if you have it in hand today, so it’s worth more to you than the same dollar bill if you don’t get it until 10 years from now.

When making comparisons, therefore, your financial planning tool shouldn’t assume that $1 that you can invest today is the same as $1 you can receive a decade from now. Once you invest it, the value of that dollar could go up (or down). You can’t make good decisions without that information.

Make Social Security decisions that assume you live a long time

When making Social Security decisions, many conventional tools focus on break-even analysis, even when it’s the wrong approach, and assume you only live to your life expectancy. That might lead you to file early, short-change yourself, and jeopardise your later years.

Economics teaches that you should make Social Security decisions assuming you will live to your maximum age of life, not your life expectancy. That’s because Social Security pays until you die and adjusts for inflation each year – a rare find!