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Schwab Retirement Calculator and when to take SS
Old 12-04-2013, 11:11 PM   #1
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Schwab Retirement Calculator and when to take SS

I've been playing with the Schwab calculator just because it's more conservative in its predictions for stocks and bonds in the future than the past many decades. What I've noticed in my runs is that unlike Firecalc, where it's sort of a wash for me when to take SS, I.e., 62 or 70, with Schwab it is a considerable advantage to wait. Anyone else have similar experiences? I'm assuming it's because their projected returns are so low and the guaranteed return for waiting for SS is so much higher?

http://www.schwab.com/public/schwab/...ent_calculator

Brian
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Old 12-04-2013, 11:23 PM   #2
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This calculator seems a little strange.

I put in a couple of portfolios. One of them put in SS (I basically doubled mine since there was no option to put in a spouse's SS) and then I put in a spending amount. SS would basically cover about 71% of that spending amount so only the remainder would come from the portfolio which would be about 3.4% of the portfolio amount I put in. I would have 3.4% for a 30 year retirement would fly. It didn't. In fact, the amount of portfolio they say I need would end up being a 2.5% withdrawal rate which I thought was very low.

I then just put in a generic $1,000,000 portfolio with no SS and spending of $40,000 (i.e. 4%). I left all the other stuff the same. This time it said I needed more money, but if I had that amount they said I needed then the withdrawal rate would be 3.125%.

It seems strange to me that if I include SS the withdrawal rate 2.5% but with no SS it was doing to let me use 3.125%.
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Old 12-05-2013, 08:01 AM   #3
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I think you must have had an input error of some sort. I put in the $1,000,000 portfolio and retiring at age 60 and got a WR of 3.28% with no SS. Then I added $15k a year of SS starting at 70 and the WR increased to 4.25%. So it seems correct that with SS the WR is higher all else being equal.
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Old 12-05-2013, 12:42 PM   #4
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Quote:
Originally Posted by bmcgonig View Post
I've been playing with the Schwab calculator just because it's more conservative in its predictions for stocks and bonds in the future than the past many decades. What I've noticed in my runs is that unlike Firecalc, where it's sort of a wash for me when to take SS, I.e., 62 or 70, with Schwab it is a considerable advantage to wait. Anyone else have similar experiences? I'm assuming it's because their projected returns are so low and the guaranteed return for waiting for SS is so much higher?

Retirement Calculator: Charles Schwab: Retirement Savings Calculator

Brian

Mine didn't change much between 62 and 70. But I imagine, what you input have a lot to do with it - that's my disclaimer.

You are right that the tool is conservative. Using this tool, I have to reduce my spending, work few more years, or do both. I am going back to my spreadsheet method to bring back sanity to all these tools.
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Old 12-05-2013, 03:23 PM   #5
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Too bad "when to take Soc Sec calculators" are pretax and fail to factor in all sources of income and then optimize income after taxes. The answers may not be the same. If there's one that includes all income sources before/after taxes (user would have to choose future tax code assumptions), that would really be helpful...
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Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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