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Is the schwab calculator an outlier?
Old 10-25-2013, 08:59 AM   #1
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Is the schwab calculator an outlier?

I did a whole MESS of calculators a week or so ago before deciding to pull the plug in May 14. All said we were golden except Schwab, which said we need another 500K. I put in my papers (not a single colleague I told face-to-face asked why, and they expressed envy; it's not a happy place). But is Schwab's calculator an outlier? It wouldn't let me put in part-time earnings that had an end date.
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Old 10-25-2013, 10:07 AM   #2
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I just tried the Schwab site and it looked like their SS estimate was much lower that the estimate I got from using the SS web site. Try using the figures from the SS web site and see if it is much closer. Also, I did not use any additional income. The two calculators that I mostly used are ESplanner and the Fidelity retirement income planner - These let you go into much more detail as to your particular situation.

No calculator can predict the future - I just plan the best I can and enjoy. To date I am under my assumed spending targets. YMMV
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Old 10-25-2013, 03:54 PM   #3
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Fidelity says I will be broke at age 90 with no additional investment. Schwab says I need 400k additional savings. Vanguard says my portfolio has a 92% chance of lasting to age 90. FIRECalc says I will have a minimum of $1mm left at age 90.

I would say the Schwab one looks much more conservative than the others.
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Old 10-25-2013, 04:26 PM   #4
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Yeah, it looks a little more conservative, maybe selfserving. I didn't dig into the details but ran my numbers and it told me I needed another $7k in savings to retire at 59. Firecalc and Fido RIP say I'm good with a decent cushion. Just another opinion to average into the mix. I don't think I'll do anything different based on this info.
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Old 10-25-2013, 08:34 PM   #5
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Thank you all--I feel better now! I do use the SS estimate from ANYPIA.
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Old 10-25-2013, 09:54 PM   #6
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I don't think it's very accurate. I put in 40x expenses retiring at 48, with middle of the road risk, and it still says I need more money for my retirement to last.
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Old 10-25-2013, 10:13 PM   #7
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I found it useless since it wouldn't let you do it for a married couple. YOu had to pick a future retirement date. You had to pick future spending that was no more than 200% of your current income - which doesn't include SS or investment returns (which is a problem for someone already retired). YOu also couldn't have varying spending throughout retirement. All that meant it wasn't very useful.
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Old 10-26-2013, 03:43 PM   #8
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My, this is one very pessimistic calculator. This is the first calculator I've seen that tells me I'm not ready to retire. And I've run through all the typical ones that are discussed here in the forums. I'm not sure what to make of it.
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Old 10-26-2013, 09:29 PM   #9
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It's using the following future return assumptions. Maybe that's the issue.

Stocks US: 6.3
Stocks Intl: 6.2
Bonds 2.9
Inflation 2.5


Also, uses a life expectancy of 90. Which makes it even worse.
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Old 10-26-2013, 09:38 PM   #10
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Quote:
Originally Posted by bmcgonig
It's using the following future return assumptions. Maybe that's the issue. Stocks US: 6.3 Stocks Intl: 6.2 Bonds 2.9 Inflation 2.5 Also, uses a life expectancy of 90. Which makes it even worse.
Also, making it even less conservative, it considers a pass as 90% confidence rate.

http://hgtools.schwab.com/rcal/html/RSCHelp.html
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Old 10-26-2013, 10:12 PM   #11
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Originally Posted by bmcgonig View Post
Also, making it even less conservative, it considers a pass as 90% confidence rate.

Retirement Savings Calculator Assumptions and Methodologies
The problem is that it is not conservative.... It is finding failure when many other plans find success...not sure why.
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Old 10-26-2013, 10:19 PM   #12
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Originally Posted by Katsmeow
The problem is that it is not conservative.... It is finding failure when many other plans find success...not sure why.
The projected returns are conservative, stocks at approx 3.7% and bonds at 0.4% real. If you are failing that may be the reason.
However:
The life expectancy is pretty liberal at 90
The confidence rate is also pretty liberal at 90%
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Old 10-27-2013, 10:04 AM   #13
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Interesting. I'm a Schwab customer and have used previous versions of their calculators but never this one. According to this one, I would need a 2.6% SWR to survive to 90 (coming up on 52 next week). I already use about 2.75% for my SWR which I feel is conservative, but sheesh, 2.6%? That give a multiple of 38x, which, by the way, is the years I would have left if I lived to 90. For me, I think 4% at this age is too aggressive, but I think that 2.6% would leave too much to my heirs. Still, our 2.75% provides a pretty comfortable existence, so we could take it down a notch or two if circumstances demanded it.

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Old 10-27-2013, 12:22 PM   #14
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Wow, good observation on the Schwab calculator!

I don't normally run the Schwab calculator and had not noticed it was a new one . I don't rely on it for me as it does not allow the detailed input we need coasting into retirement. (DH went part time this year -consulting.)

I do however use it for a quick and easy ballpark check for DD , who I advise. She has no interest in investing so she has money diverted to her Roth and I invest it periodically for her . Just recently I did so and ran her Roth and 401k numbers through the Schwab calculator . It had been over a year since I ran it . I was shocked to see she was falling a bit short for retirement . Until recently she has been putting over 20% into savings (age 28) and her projections looked good. She's had a couple of hefty raises this year and I was thinking that put her behind. ( She is maxing the Roth so that does not go up with raises like the 401k does.) I will now need to look at it more closely and see if I need to council her to up the 401k contributions . I was going to wait until tax season to have her decide anyhow . She bought her first house this year and it will be a big item on her Schedule A.

I don't see her in person often and hate to make finances the main thing we cover . Shes bright and capable - her eyes just glaze over at the thought of a budget . Good thing I ingrained in her never spend more than you have and pay yourself first. It also helps that she makes a good living ....

Her 401k is with Fidelity so I'll probably run her numbers through theirs too. At her age it is really a guesstimate anyhow .
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Old 10-27-2013, 02:37 PM   #15
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Schwab: For every "green" scenario, I keep getting "With your current savings plan, by the time you reach retirement ,you will have an estimated $0 more than the minimum amount you'll need." Always says 0 - never a positive number.

Maybe you never have more than you'll need....

Does come up with non-zero red number on failure scenarios
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Old 10-27-2013, 03:52 PM   #16
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We're in our mid 30s. Both of us have been maxing our IRAs since our teens. I started contributing to a 401k at 21 and have been hitting the IRS max limit since I was 26. Our retirement savings are invested moderately aggressively. According to this calculator we can safely retire at 66.
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Old 10-27-2013, 06:53 PM   #17
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Is this the calculator everyone is referring to?

Retirement Calculator: Charles Schwab: Retirement Savings Calculator

I don't see anything about age 90.
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Old 10-27-2013, 09:49 PM   #18
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Originally Posted by explanade
Is this the calculator everyone is referring to? Retirement Calculator: Charles Schwab: Retirement Savings Calculator I don't see anything about age 90.
Look at the right part of the screen in blue print: "how this tool works".
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Old 05-16-2014, 10:44 PM   #19
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Originally Posted by bmcgonig View Post
The projected returns are conservative, stocks at approx 3.7% and bonds at 0.4% real. If you are failing that may be the reason.
However:
The life expectancy is pretty liberal at 90
The confidence rate is also pretty liberal at 90%

I ran this again and found it much nicer this time. So wondering why I read the assumptions. They apparently can change every year.

Turns out they changed the projected returns to 5% stocks and 2.5% bonds..both real.

http://hgtools.schwab.com/rcal/html/....html#LONGTERM
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Old 05-17-2014, 08:26 AM   #20
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We've been Schwab customers for a long time and I really think it's a fantastic firm. Exceptional customer service.

That said, I think their off-the-shelf retirement planning tools are weak. I recently did a free retirement consult and while the individual I worked with was good, it was obvious his tools were weak. I think they are generally not geared to handle the type of thinking that happens on this board. Putting 12% of your income in a moderate portfolio aiming to retire at 64? Probably fine.

Dealing with stock options, deferred comp, and aiming to retire at 50 with a three-leg withdrawal strategy strategy that evolves as different assets mature? Does not compute. We had to torture this guy's tool to try to fake it.

Eventually the advisor just said "I do this a lot...and honestly at your asset levels and savings pace, there is no way you can miss your goal," and we shifted gears to investment options. He did have creative and interesting investment options that I would never have thought of or even known about.

He did politely mention a "full" retirement plan available for $2000...but he knew before he said it that we weren't going there ;-)
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