Wisconsin Beth
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No, we don't walk away. But when we're holding on to something precious, we run.
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Post by Wisconsin Beth on May 2, 2011 9:13:38 GMT -5
Age 40; income 100K; retire at 65; 85K/year retirement income; die at 85.
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CarolinaKat
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Post by CarolinaKat on May 2, 2011 9:54:26 GMT -5
3.6 million
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tskeeter
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Post by tskeeter on May 2, 2011 17:28:37 GMT -5
I have a lot of reservations about a very limited calculator, like this one. My biggest concern is that the number it spits out appears to be based on averages. When a model uses averages spits out a number, that number has only a 50% chance of being adequate to meet your needs based on the assumptions you entered. I'm really looking for a much better chance of having adequate retirement funds than a 50/50 chance of outliving my resources.
The better calculators use a monte carlo simulation, to look at your chance of a successful retirement based hundreds or thousands of different economic scenarios that could occur between today and your death. These will give you a better assurance that your resources will be adequate to support your plans.
The worst approach to retirement planning? In my opinion, using gross rules of thumb, such as the 4% rule. The 4% rule was developed for a different set of economic conditions than exist today. It doesn't take into account personal needs and circumstances. It doesn't take into account that you or your spouse could easily live longer in retirement than the 30 years I understand is the basis of this rule. If you want a horse shoes and hand-grenades estimate (kind of close counts) something like the 4% rule is OK. But 4% shouldn't be to total extent of your retirement financial planning. If the 4% rule is the only retirement financial planning you do, you deserve to be destitute and living in your kids damp basement at 80 years old.
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maraqxa
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Post by maraqxa on May 2, 2011 21:27:08 GMT -5
OK, I REALLY need to stop doing any "calculations", read any and all "statistical" data, finding out what the rest of the population is doing, etc etc etc All I can do is make sure we do what we can and that's about it, otherwise, I will die from a heart attack well before I am going to need any retirement income Lena LOL! I feel the same way!
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cronewitch
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Post by cronewitch on May 2, 2011 21:46:46 GMT -5
OK. But 4% shouldn't be to total extent of your retirement financial planning. If the 4% rule is the only retirement financial planning you do, you deserve to be destitute and living in your kids damp basement at 80 years old. I think most of us don't really trust the SWR of 4%. I use it as a base that should work, if I have 500K invested it should allow a withdrawal of 20K which is about what I need. I can live on a little less and will have other income of about 8K for a few years and maybe a inheritance from my 84 year old mother in 20 years or so. I will save an extra 125K or so as a cushion and if I need to sell my house in my 90s to live I can. I could also decrease lifestyle, get more roommates or other ways handle less return on investment.
I will never live in my children's damp basement since I am barren.
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skubikky
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Post by skubikky on May 3, 2011 6:51:02 GMT -5
$8.5 million...interesting
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tskeeter
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Post by tskeeter on May 3, 2011 17:15:54 GMT -5
I'd hope not. Then again, how many of us know people who think they will have the retirement they desire on SS alone? Or who think they will work until they drop dead, so they don't need to save for retirement.
Seems that a good portion of the US population is looking for a simple answer to every question rather than searching for an appropriate answer. The prospect of us funding the retirement those folks will demand scares the living daylights out of me.
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patchwork150
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Post by patchwork150 on May 3, 2011 17:42:10 GMT -5
242,725
If I die at 90 and work to 65 at 60,000 a year and 23 years old... drawing 3,500 a month. Seems low to me.
Well, considering I am not taking Dh into account, perhaps. But I wonder if they adjust for inflation.
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ameiko
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Post by ameiko on May 3, 2011 20:56:59 GMT -5
I have a hard time believing that we will need 5+ million dollars to retire. Most people don't have that yet there are not hordes of starving retirees dying in the street.
Don't get me wrong: save/invest and don't rely (or at least just rely) on Social Security. It's just that I am skeptical of financial institutes that make more money the more that we give them telling us that we must give them more money!
Conflict of interest, perhaps?
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museumgal
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Post by museumgal on May 3, 2011 22:36:11 GMT -5
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hoops902
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Post by hoops902 on May 4, 2011 11:13:07 GMT -5
"The most complex one I've ever seen is Chase's --- let's you input a lot of data."
To play devil's advocate...given that most of the people in this country have no clue about their own finances, much less the economy as a whole...I would think the fewer inputs that you allowed Joe Blow to decide on the correct assumptions the better. The number you get is only as good as the assumptions put in, for most people, that means garbage. For the more savvy investor, it means more control over how you think things will play in the future.
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Wisconsin Beth
Distinguished Associate
No, we don't walk away. But when we're holding on to something precious, we run.
Joined: Dec 20, 2010 11:59:36 GMT -5
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Post by Wisconsin Beth on May 4, 2011 11:14:29 GMT -5
I'm working my way though the Motley Fool's 13 step retirement thing. Quick question for anyone - they want me to estimate inflation for my lifetime. Does anyone have suggestions for what inflation is going to be for the next 50 years or so...
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tskeeter
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Post by tskeeter on May 4, 2011 11:39:14 GMT -5
Beth, the historical inflation figures that I've seen reported for the last 10 -20 years or so are in the 2.5% - 2.7% range. The figure commonly used for planning purposes over the past few years is about 3%. Just did a retirement planning review with our financial adviser. He increased his inflation projection from 3% to 3.5% to allow for the high probability that we are in for a period of higher inflation than we have had for quite some time and that we are within a few years of retirement.
Then, bear in mind that, due to the rate of increase in the cost of medical care, retirees usually experience a higher rate of inflation than the general inflation rates that are used to adjust SS benefits, etc. This tends to make the gap between retiree income and expenses grow as time goes on.
What would I use? I'd start with something in the 3.5% - 4.0% range then adjust for other factors that could affect my estimate. If you are in your 20's or early 30's, you can probably use a little lower inflation rate than someone who is close to retirement. If your family medical history would indicate you could be a heavy user of medical care services, I'd opt for something in the higher end of the range. Inflationdata.com reports that we are entering a period of increasing inflation which could be as long as 20 years (the length of the last period of declining inflation). This statistic would push one toward the higher end of the range.
Obviously no simple answer, so it's pick a number time for you.
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museumgal
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Post by museumgal on May 4, 2011 13:56:25 GMT -5
"The most complex one I've ever seen is Chase's --- let's you input a lot of data." To play devil's advocate...given that most of the people in this country have no clue about their own finances, much less the economy as a whole...I would think the fewer inputs that you allowed Joe Blow to decide on the correct assumptions the better. The number you get is only as good as the assumptions put in, for most people, that means garbage. For the more savvy investor, it means more control over how you think things will play in the future. I suppose a calculator that's more simple is better in that case. It would also be good if you just wanted a quick estimate. The advantage is its very quick and simple to use. But for me the simple ones just don't cut it. Ameritrade has a good one too -- what it does that is it looks at all your money, not just retirement funds, and sees if you are on track for all your goals. For example, if you want to send your kid to college there's an option to plug in 4 years of that expense. You need a lot of data to input into those so it doesn't give you the quick answer like this one does. www.tdameritrade.com/planningretirement/wealthruler.html
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Mrs. Dinero
Well-Known Member
100% about truth & justice. Always trying to give mercy a chance.
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Post by Mrs. Dinero on May 4, 2011 14:02:51 GMT -5
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myrrh
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Post by myrrh on May 5, 2011 16:28:48 GMT -5
My number is almost 3.5 million. Thanks Bonnap for the firecalc link, I found it easy and fairly intuitive. Will have to check out the other links given here too.
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Post by illinicheme on May 5, 2011 20:50:46 GMT -5
I got a giant number, like $11 million or something. I used current income, assumed we would still need that same amount, tried to retire around 62, and assumed I'd live until 90. (I'm currently rapidly closing in on 33 years of age.)
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DVM gone riding
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Post by DVM gone riding on May 5, 2011 22:21:24 GMT -5
3,885,709 which is about a mil more then most sites tell me. So I don't think this is the best web site. One thing I don't like is the whole "only draw down 4%" thing. I don't NEED to leave anyone money!!
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