Best Retirement Calculator?

[LightningDawg]

I'm new to this forum. Just turned 50 and hoping to retire in the next 5 years.

What is the best retirement calculator to use? Is FireCalc?
I have played around with bloombergs, troweprice, cnnmoney, fidelity, but they all have some shortcomings.

Thanks.

 

[Gone4Good]

but they all have some shortcomings.

'tis true. Use a variety, and a grain of salt.

 

[obgyn65]

This calculator is my favorite one : See Where You Stand | Merrill Edge Retirement

 

[LightningDawg]

This calculator is my favorite one : See Where You Stand | Merrill Edge Retirement

Thanks. I will give this one a try.....

 

[REWahoo]

Use as many as you'd like but be sure you peek under the covers to gain an understanding of how each calculator works. If that information isn't available the output is suspect.

Here's info on the process FIRECalc uses: FIRECalc: How it works

 

[traineeinvestor]

As good as some of these calculators are, they are only as good as the information you put into them.

When I first started thinking about retirement and playing with some of these (including the excellent FIRECalc), I woefully underestimated my expected spending in retirement - a few years of closely tracking spending and brainstorming adjustments with mrs traineeinvestor produced materially higher [-]wants[/-] needs and resulted in a much higher number being needed. If you haven't already done so, tracking your spending in detail for a few years is a very worthwhile exercise.

 

[LightningDawg]

As good as some of these calculators are, they are only as good as the information you put into them.

When I first started thinking about retirement and playing with some of these (including the excellent FIRECalc), I woefully underestimated my expected spending in retirement - a few years of closely tracking spending and brainstorming adjustments with mrs traineeinvestor produced materially higher [-]wants[/-] needs and resulted in a much higher number being needed. If you haven't already done so, tracking yoru spending in detail for a few years is a very worthwhile exercise.

Agree...I am in the process of tracking our spending month by month. I believe I am OVER estimating our spending needs in these calculators, so that the projections are conservative.

BTW...how do substitute something else for the "confused about dryer sheets" under my user name?

 

[Meadbh]

Different calculators for different purposes. Firecalc is good because it includes Monte Carlo simulation, while many calculators assume a constant ROI. To account for sequence of returns during decumulation, I use otar retirement calculator. I also like Canadian Retirement Income Calculator because, while it doesn't do simulation, it calculates my entitlement on the Canada Pension Plan and Old Age Security and the clawback for a high income retiree.

 

[traineeinvestor]

BTW...how do substitute something else for the "confused about dryer sheets" under my user name?

Spam the board with lots of posts. It worked for me.

 

[REWahoo]

Firecalc is good because it includes Monte Carlo simulation, while many calculators assume a constant ROI.

FIRECalc doesn't use Monte Carlo simulation, nor, as you correctly point out, does it assume a constant ROI. It uses actual historical market performance.

From "How it works":

As Jonathan Clements in The Wall Street Journal put it, FIRECalc "analyzes what would have happened if you retired in 1871, in 1872, in 1873 and so on. It then calculates how often your strategy would have panned out historically."

 

[LightningDawg]

FIRECalc doesn't use Monte Carlo simulation, nor, as you correctly point out, does it assume a constant ROI. It uses actual historical market performance.

From "How it works":

Which retirement calculator does our Moderator recommend?

 

[LOL!]

There is no best retirement calculator. You have to use them all.

 

[REWahoo]

Which retirement calculator does our Moderator recommend?

If you are referring to me (I'm a retired moderator), I agree with those who say there is no one "best" calculator. Each is designed to do specific tasks and each has pros and cons.

Consumer Reports tested three free "online tools for retirement planning" in their February issue:

Retirement Planning - 401k & Retirement Investing, 401k Investment, Retirement Calculator & Tools - AARP
AnalyzeNow, Retirement Planning
www3.troweprice.com/ric/ricweb/public/ric.do

While FIRECalc is designed to help you determine how long your retirement savings will last, the three above are focused on "projecting your retirement needs". Once again, each had pros and cons.

 

[Arnie]

I use the paid version of ESPlanner and it is great product for my purposes. But I still use FIRECALC and its historical data. Don't limit yourself to one tool.

 

[easysurfer]

The best calculator? I choose the one that says I will succeed

 

[Katsmeow]

Firecalc has been the most helpful for me although it has its drawbacks. I wish it more easily allowed you to simulate one spouse retiring with the other continuing to work either full or part time for a time and made it easier to have varying incomes at different times (I've figured out how to do these but it could have been more straightforward).

Many other calculators have difficulties as well. Some are not helpful at all because they assume one person and don't deal with two people well.

Others are ridiculous because they assume you need 80% or some set percentage of pre-retirement income and don't let you modify what you think you will need in retirement.

I used Financial Engines which was available to use through DH's 401k account at Fidelity. It was useful mostly because it confirmed the results of Firecalc but was not as helpful as Firecalc.

I paid for ESPlanner which I really liked the idea of. I confess that during the year that I was entitled to updates to it I never quite got around to inputting everything and truly understanding the program. The program reminds me a lot of old DOS programs from many years ago. I found it extremely (extremely!) user unfriendly and ultimately I just didn't have the time for the considerable learning curve. When I ESR'd and had more time...my updates were over with and I didn't want to pay for another year so it just sort of sits there. Maybe I'll get back to it someday.

 

[Arnie]

I found the ESPlanner learning curve to be moderate but in line with the flexibility it provides. If you are detail-oriented and/or want to do simulations (e.g. which pension or SS option is best) then you will probably like this tool. I've noticed it is actively supported and has improved over the years.

The one thing ESPlanner does not simulate, even with its Monte Carlo option, is how my plan would have fared against actual historical data. This is important to me. FIRECALC excels here and the price is right.

So again, look at multiple tools and decide for yourself. I tried Financial Engines via Vanguard, Retirement Income Planner via Fidelity, ESPlanner, FIRECALC and several others. Every one of them will happily turn garbage into garbage so make sure you have all your input straight. If you are interested in any of the paid programs look for a trial or money back option and set aside time to give it a fair shake.

 

[JBmadera]

the best calculator? I choose the one that says i will succeed

bingo......;d

 

[MasterBlaster]

The "Optimal retirement calculator" ie. ORP gives a tax-optimal distribution. Their model for nestegg growth is simple however the calculator is enlightening as to how and where (After tax, before tax, Roth) to take money out of your nestegg first and in what order.

Spend some time with this one - it will give you lots of insight:

Optimal Retirement Calculator and Retirement Decision Support System

Retirement Calculator - Parameter Form

 

[kyounge1956]

Another calculator is Flexible Retirement Planner. Unlike FIRECalc, this one is a Monte Carlo model.

 

[Wolverine]

The "Optimal retirement calculator" ie. ORP gives a tax-optimal distribution. Their model for nestegg growth is simple however the calculator is enlightening as to how and where (After tax, before tax, Roth) to take money out of your nestegg first and in what order.

Spend some time with this one - it will give you lots of insight:

Optimal Retirement Calculator and Retirement Decision Support System

Retirement Calculator - Parameter Form

The ORC above is excellent.

 

[braumeister]

My personal favorite calculator is this, quoted from Bernstein's The Investor's Manifesto:

When all is said and done, I still know of no better risk analysis tool for retirees under the age of 70 than this simple narrative: At a 2 percent withdrawal rate, your nest egg will survive all but catastrophic institutional and military collapse; at 3 percent, you are probably safe; at 4 percent, you are taking real chances; and at 5 percent and beyond, you should consider annuitizing most, if not all, of your nest egg.

 

[Independent]

A couple posts have said FireCalc doesn't do Monte Carlo. But it has this option on the Investments tab: "A portfolio with random performance, with a mean total portfolio return of % and variability (standard deviation) of %. Assume an inflation rate of %."

Am I mis-interpreting that?

 

[Independent]

I'm most comfortable if I build a calculator myself. The worksheet stuff is simple as long as I stick to a fixed investment return, and that way I know exactly what my income/spending/tax assumptions are.

Then I can compare it to calculators that other people build. For example, run Firecalc with a fixed interest rate to be sure it duplicates my calculations, then switch it to historic or random returns.

 

[chinaco]

Which issues do you want to explore? There are all kinds of tools available.... but for different aspects of the retirement planning/modeling puzzle.