Retirement Calculators--advice?

[Rachel]

Hello everybody,

Some developments at my workplace have me worried that I may not be able to hang on to this job all the way through to age 67 or 70, which are my target dates for retirement. (I love what I do.) I've tried about 20 different Retirement Calculators, and they all seem to give wildly different results. Either I have to save $50,000 a month to retire at 65 or I don't have to save another penny and can retire now at age 61---same inputs, different calculators. Go figure.

Then, I also notice that changing one variable by just one degree can create enormous disparities of outcomes. If I die at age 85 I can afford to spend like a sailor and still have buckets leftover--if I live to 90 I'm like eating dog food!

Does anyone have a favorite retirement calculator or some advice about how to set up some reasonable "assumptions?" Those "assumptions!" Who can possibly predict what inflation and stock growths are going to be?

thank you!

[jp1]

The reality is that everyone's version of retirement is different so retirement calculators should be taken with a bucket of salt. First you need to look at your likely expenses in retirement. Do you have a paid for home with low ongoing expenses like property taxes and HOA fees? Second, health insurance. If you currently have employer provided insurance this expense may actually go up in retirement. Especially before you are old enough for medicare. Next, what do you plan to do in retirement? If you plan to just putter around the garden and read a lot of books it won't be that expensive. If you plan to do a lot of travelling or other expensive hobbies then you'll need to plan accordingly. On the income side you're right about stocks. Most people get more conservative with their investments as they near retirement because wild swings in their asset values could be devastating. Just imagine someone who had planned to retire in the spring of 2009 who had most of their retirement funds invested in the stock market. Devastating. If they'd had the option to ride it out for another 5 years and retire now they'd be fine, but how many people have that option when they're getting near retirement.

[Kestra]

You might want to check out this forum for good info:
http://www.early-retirement.org/forums/

And this is the calculator most of them use: http://www.firecalc.com/
It's fairly complex, so there's lots of reading if you're interested. It's useful because of the wide variety of assumptions you can input and also how it gives results as a probability of running out of money, rather than how much money you need to retire.

[awakenedsoul]

I would look at your expenses over the past few years. Are they pretty consistent? Are you debt free? That makes a huge difference. I didn't plan to retire, but I did it by default. I was surprised to find out that I reduced my living expenses greatly. I cut them to the bone. There's a blog called Down To Earth about a woman who retired early by reducing expenses, paying off debt, and living simply. I followed her advice, and it really worked. I still go to auditions, but the number of jobs for people my age is low. I enjoy the experience, and fortunately, I don't need the work the way I did when I was younger. I've found that my spending has dropped in many categories: food, clothing, gas, car maintenance, etc. Also, I no longer have business expenses: business phone, business rent, insurance, accounting, etc. It's so much cheaper this way! I make all of my meals from scratch and I make a lot of toiletries and household cleansers, too. If you have cheap hobbies like I do, that also helps. (farming, knitting, bike riding, and singing.) I can easily live on $20,000. a year. So, I don't need the typical amount they advise for retirement. (at this point, anyway.) My father taught me to learn to live off of the interest of your investments. I hope it works out for you. If you google early retirement, you'll find lots of stories.

[Rogar]

The firecalc above was my go-to. I think the retirement calculators are good guide lines, but are not to be taken as exact. There are just too many unknowns, and a good dose of common sense calculations are an excellent supplement.

[bUU]

I used to use firecalc, but it's development has been dormant so long that I don't trust that it reflects enough of the recent structural changes to the investing environment to be a reliable resource, at least not alone. Instead I rely primarily on Fidelity Retirement Income Planner (https://incomeplanner.fidelity.com/planner) and Quicken Lifetime Planner (http://quicken.intuit.com/personal-finance-software/deluxe-money-management.jsp).

[Rachel]

I really appreciate the answers. I have a paid-for home and no debt...BUT...I live in an expensive metro area with high taxes and inflation. Move? Over my own dead cold body, I love this city. I pretty much know what inputs to place in the calculators, but with the same inputs the results are wildly different. Thank you for the early-retirement resources, this is great info that I hadn't looked at. I can make an eagle scream with the best of them, but I love to travel...Thanks again everyone.

[bUU]

I had a hard time understanding why I was getting radically different answers from the various tools. It took a bit of work, digging into the detailed data input pages, to realize how I was driving one tool or another off on a tangent that other tools didn't even have the means to pursue. (Firecalc is especially prone to this behavior, especially if you change the spending model away from the default.) Once I realized what each of the detailed data fields did, and set them consistent to each other, the bottom line answers started becoming more consistent.

[bUU]

I just remembered something else - the various tools handle expenses differently from each other. For a while QLP was far off from the others, with regard to expenses, but I eventually realized that it was because certain expenses QLP handles separate - i.e., does not expect you to include them in your expenses estimate. Specifically, loan payments (for loans Quicken knows about) shouldn't be considered expenses, since QLP will factor in those payments itself. (Same with taxes and savings, but that's more common among the tools.)

[Blackdog Lin]

Being lower income, I went with a more common-sense, redneck, low income retirement calculator. Of my own, of course.

(1) debt? Am I in any? Is the house paid for?
(2) savings? Emergency savings account?
(3) other common-sense regular savings? A "Freedom account", to pay for real estate taxes, car tags/insurance/, homeowners insurance, etc.?
(4) healthcare insurance. Can I pay for it in retirement? How much will it go up?
(5) Are the basic utility bills and grocery needs getting paid for without thinking about it?
(6) Is there any extra for fun?

And once you get to there.....I figured calculating an extra 20% on top to allow for inflation. And then I realized that we were awful good at living lower on the food chain, and could live a happy life doing without much of what we think we have to have today, which gives me wiggle room in my retirement calculations.....

It can be done.

And I decided that a person could retire early. If one was willing and able to live more simply.

[softweave]

I like ESPlanner (esplanner.com) because it's approach encourages you to live comfortably but frugally now so you can continue to live comfortably your entire life. You can use their online version for free as long as you don't mind not being able to save your projections. The only downside to their desktop version is it only runs under Windoze.