Home > ESPlanner Review (Financial Planning Software)

ESPlanner Review (Financial Planning Software)

January 30th, 2009 at 02:35 pm

I recently purchased ESPlanner from The software is a financial planning package developed by Laurence Kotlikoff, Professor of Economics at Boston University, and Dr. Jagadeesh Gokhale, Senior Fellow at the Cato Institute. Having played around with it for about a week, I figured I would post my initial thoughts.

First, the idea of the software is "consumption smoothing". In other words, the goal of the software is to attempt to generate a level standard of living throughout the user's life. It does this by varying the amount saved or dissaved year-by-year. I think this is a great concept, because it is a more holistic approach, taking into account changes in household size (children being born and moving out), housing costs (buying or selling a home), large one-time purchases (vehicles, vacation homes, etc), and one-time windfalls (inheritances), as well as a host of configurable events, or ongoing or recurring situations. The software creates a detailed plan on how much to save or dissave (spend down savings) each year in order to maintain a smooth living standard per adult. ESPlanner takes into account economies of scale, so a 2-person household can live as cheaply as 1.7 single-person households. Likewise, as household members are added, there are similar economies of scale. It is very computationally intensive and generates a lot of data in spreadsheet form, along with a consolidated PDF summary report.

Now to the negatives. The design of the software is quite spartan. The interface reminds me of freeware, which is not a compliment. I noticed a number of small bugs, none of which made the software unusable but were nagging nonetheless.

For younger people, I would take ESPlanner's recommendations with a grain of salt. The software requires many detailed projections of expenses, income, savings, household changes, etc. Any error in these projections could have a big effect on your plan and could throw off your projections. For older people who are approaching retirement, the variables are fewer and less fuzzy, and the projections are probably more accurate.

9 Responses to “ESPlanner Review (Financial Planning Software)”

  1. Dido Says:

    Thanks very much for posting this review. I've skimmed Kotlikoff's book (Spend 'Til the End) and have thought about the planner, but its price tag is a little hefty for me at the moment.

  2. Broken Arrow Says:

    Terrific review! I've heard about the software and wondered for some time. Never touched it because it costed a tidy sum though....

  3. Dido Says:

    I hate to mention this given that you've shelled out for the program, and I have no idea about the quality of this and have yet to try it myself, but a finance professor named Sherman Hanna has put out a free Excel consumption smoothing program at

    (see for explanation).

    And I understand that there's a competing model for lifetime consumption smoothing by another finance professor named Moshe Milevsky, who's written a book "Are you a Stock or a Bond?" based on the idea that you should allocate your retirement based on your human capital expected net cash flows. That is, if you expect that in the future, your income will be high but variable (e.g., a young MBA, like a stock), your retirement investments should be allocated more to bonds, while if you are older and have a pension (like a bond), your retirement savings should be allocated more to stocks. His web site (with articles) is at

  4. scfr Says:

    Thank you for the review; I've also been very curious about this software (as I find the idea behind it most appealing).

  5. Freddy Says:

    This is my second year of using Esplanner. I am pleased with it so far. Besides living standard smoothing capabilities, the software also allows me to price career and housing decisions -most of which I find are difficult to price properly.

    I'm aware of Prof Hanna's software. But not sure how much it's been field-tested so I chose esplanner.

    There's a online version of esplanner which I helped beta-test a while ago, not sure if this is already released.


  6. Richard Munroe Says:

    ESPlanner also goes through periodic updates (yearly at the minimum) to stay abreast of changes in federal and state tax regulations, social security rules, and a wide variety of economic variables. Most free spreadsheets and other similar products don't do this and can't easily answer questions like "What is the difference in my family's standard of living if I take a lower paying job in Florida (no state tax, warmer, lower cost of living near where the job would be) and work until 70 versus staying in New York and making my current salary and trying to retire at 62?".

    The strength of ESPlanner isn't that you do your planning once and forget about it; that is irresponsible and works for neither old nor young. It's that it puts a ceiling on your discretionary spending and a floor on your savings (above and beyond retirement accounts), i.e., spend more than the recommendations and your economy isn't sustainable, save less than the recommendations and the same is true. It's up to you to choose what to do and how you believe the future will unfold. You can always save more and spend less (a conservative move) leaving you better positioned in the event of unexpected events (like the current financial mess) or vice versa and hope you die young enough to not have run out of money.


    Dick Munroe

    p.s. In the interests of full disclosure, I'm one of the engineers at ESPlanner, working mostly on the economic calculation engine used in the product.

  7. emoneyadvisors Says:

    Whatever the financial planning being scratched on paper but the main chain
    between the clients and the planners are advisors who brought all the planes
    on before clients. However advisors also need some tools that would made them
    eligible to put their plans before clients with greatest ease and can would
    enable them build a strong relationship with clients, made
    its financial planning software tool specifically for the advisors so that
    they could find easiest ways while handling their customers, but amazing
    thing is that ESPlanner has also such kind of software.

  8. Madelyn Says:

    I like that ESPlanner seems to offer an unbiased approach to unveil true costs of living. Other web based financial tools are typically attached to an adviser that may only be compensated from certain products (life insurance, securities) and may be influenced to the successful close of such products, which may cause the public to miss out on additional macroeconomic viewpoints.

    It seems like ESPlanner is heavily weighted on Social Security Planning. Social Security may not be around for much longer, so I believe that it should be viewed as a bonus for younger generations (not a cornerstone to long term income planning). Furthermore, there is still a lot of guesswork to be done when it comes to predicting how the market rates with ultimately align with what may be ideal.

    I'm impressed that ESPlanner has incorporated taxes and inflation. However, the software does not seem to mention much about asset protection to make any of the projections truly sustainable.

    This seems to be a phenomenal tool to help the public reach out of obsolete planning methods and to pressure test financial beliefs.

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