40 years Old Financial Calculators Fail Us Thread For Good Savers

[Anonymous]

The assumptions I use retire at 55 assume we will get ss and assume 70 percentage of income. Since we save such a high percentage now, we won't need to add that at retirement.
Just went online and if we save 60k per year, we are on track to have between 8.5 and 16.8 k per month with our goal amount of 12.6k. It says when we die we will have been 0 and 52 M. Under poor market conditions, we will run out of money in like 5 years. I'm thinking this Monte Carlo simulator is pretty useless.

[Anonymous]

Retiring at 55 really ups the amount the calculators assume you will need (and rightly so!). Put in 65 first, and see what it says. That should give you a sense of how 'off' the calculator is. Then start playing with your assumptions like interest, future earning increases, and retirement age.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yeah, I have noticed this about those calculators too. Right now ours says we need to save $10 million for retirement and that we are off-track because at our current savings rate we'll have only $8 million. That just seems insane. I wonder if they assume that you won't make any changes in lifestyle???

I think that's exactly what they assume. I don't know about you, but is fully intend to live somewhere with a much lower cost of living when we're both retired.

We do too. There's no way we are retiring in the DMV.

[Anonymous]

This year the stock market has been crazy. The S&P 500 went up 30%. We have a fair amount of S&P 500 and total market index funds and they performed like crazy this year (some in our Roth IRAs, some in a taxable account). I expect this growth to be anomalous, akin to people who bought their house when the market was down. But when I plug numbers into the calculator, it assumes a more average growth. There is a luck component to investing, and the calculators are fairly conservative so as to not lead people astray.

[Anonymous]

0-52M at death is a crazy range.

[Anonymous]

Anonymous wrote: we are on track to have between 8.5 and 16.8 k per month with our goal amount of 12.6k.

$8500-$16.8K per month with a goal of $12.6K PER MONTH?

We currently spend $10K per month with 2 kids in daycare ($2800) and mortgage ($3500 because I pay extra principle each month). My mortgage will be paid off before we retire. Why in the world do you need $12600 per month post-retirement?

[Anonymous]

PP yes that is probably a better way of looking at it...8.5k per month should be sufficient with no tuitions, house paid off. At that rate we won't be taking fancy vacations or giving gobs of money to the kids but it is probably sufficient to lead a simple life. I assume medical will take out a big chunk.

[Anonymous]

I like the Choose to Save ballpark estimator:

http://www.choosetosave.org/ballpark/

You can play with different assumptions (inflation rate, age at death, etc.) to see what influence those have on the amount you need to save. I think that you will find that under most assumptions you are on track to retire comfortably.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Well, paying off your house isn' that great of a saving strategy. It's a fine strategy to improve cash flow, don't get me wrong, but having so much of your wealth in an non-liquid investment isn't usually wise. At the very least open a HELOC on it.

It's my alternative to keeping more money in fixed income. I figure if we have a job loss, our fixed expenses will be lower once mortgage is paid off. It's the law that we could get our loan reamortized without fees and we've almost paid off a 30 year loan in 5 years ( last time we refinanced). I know we will be missing the tax deduction...but we did this post 2008 after we lost 1/2 our net worth in stocks. We didn't pull out of stocks but just didn't invest more in college savings accounts.

WHIch law?

[Anonymous]

Ok...slightly wrong here. Not a law but offered by loans backed by Freddie and Fannie. It is called loan recasting.

http://realestate.msn.com/cant-refinance-consider-recasting-instead

[Anonymous]

Dude, if you have that much money, go to a financial advisor and ask the question instead of playing around with online calculators and posting here.

[Anonymous]

Your problem is that likely have inflation estimates too high or annual salary increase too high or estimated return after or before retirement too low.

Any of these items will cause a problem.

[Anonymous]

Anonymous wrote:There's no way we are retiring in the DMV.

Lord, I hope not. Who in their right mind would want to spend the rest of their life watching people renew their driver's licenses?

[Anonymous]

I find it hard to believe that a calculator says you need to save 75% or more of your take-home income to retire. That's quite contradictory in itself since it assumes you are able to live just fine on the 20% left. (Assuming $220k income, 30% total taxes which may be low, $10k/month is 76% of take-home.)

[Anonymous]

^25% left.