This page explains some frequently asked questions about miPlan from PlanPlus.
1. Why does the % of Goal Achieved provide one percentage on the miPlan screen, but on the Risk Capacity screen it provides a lower percentage?
On the miPlan screen the % Goal Achieved is based on a straight algorithmic solve based on the goal that you have created and the results of your current capital, savings and pensions. Let's take a very simple example and assume that you want $100,000 a year of income in retirement for 20 years. Lets assume no inflation and no rate of return, so you need $2,000,000 when you retire. If we said your retirement is in 10 years, you currently had $1,500,000 and you could save $50,000 a year for 10 years, you would have accumulated $2,000,000, so the funding for your goal would be completed or 100% achieved. miPlan is more sophisticated this this and takes account of inflation, taxes, growth on your investments and more, but the concept is the same - what percentage of the money you want for you income is accounted for.
The Risk Capacity page is a much more complex calculation but is important to understand. For retirement you might have said you expect to last for 20 years, but in fact there is an issue called "mortality risk", which basically means "what happens if you lived for 30 years instead of the 20 you planned for?" There is a risk you could outlive your money. Even though we assumed an investment return of 0% a year (to keep the match simple), we all know that the return could be higher or lower. Maybe the return could be a low of -5% or drop in value and a high of 10%, but we expect 0% return. On the risk capacity screen we look at a "worse case" or if you were a mathematician we would say "2 standard deviations from the mean". In non-geek speak this means there is only a 2.5% chance your return could be as low as -5%, but the chance exists. So even if you saved all the money that we thought you needed for the goal there is a chance returns could be worse than we expected and that you could live longer than expected. When we combine these factors there is always some chance you will not achieve your goal. That is the percentage you see on the Risk Capacity and that is why the chance of achieving you goal is always less than the the % of the goal you have funded.