Gen-X Calculator

[arrete]

For you true Young Dreamers, the Generation-X Excel spreadsheet on intercst's homepage
http://www.retireearlyhomepage.com/software.html
has been configured to use on the Internet by 2Web Technologies.
http://home.xl2web.com/xl2webModel.jsp?uid=S9A3Q4I0

Give it a look-see.

arrete

 

[soupcxan]

Looks good, but where is the calculator for "echo boomers" like me? I'm not some grey-haired one-food-in-the-grave gen-x'er.

And let me just say that "echo boomer" is one of the worst possible names for a generation that they could've choosen.

 

[dancalio]

Thanks for the info.

That is useful to get a rough idea of things, but let me just note a couple things.

1. It uses a 10% return assumption and a 0.2% investment expense ratio. Besides quacks on cnbc I'm not sure who else would predict this sort of return going from the current market valuations. If you're using 0.2% as your expense ratio the only funds that would fit this are mostly us index funds -- it's been quite a while since sophisticated investment types have recommended anything like a portfolio 100% in an s&p index and/or expected 10% from such a portfolio.

2. This being said, the projections can change wildly if you adjust the return down to a more reasonable level of 7%, or 5%. This would add years to the time until you get to retirement and require a much higher nest egg to allow for 100% safe withdrawal.

3. The study reports that there's little difference to retirement between someone making $30,000 and sombody making $100,000 or $200,000. Well, this goes without saying if the $100,000 earner continues to spend a similar percent of his/her salary as the $30,000 earner. But LBYM is usually an integral part of retiring early and the big earner can quite easily save a MUCH higher percentage of his/her salary. The methodological mistake here is clear.

 

[intercst]

Thanks for the info.

That is useful to get a rough idea of things, but let me just note a couple things.

1. It uses a 10% return assumption and a 0.2% investment expense ratio.  Besides quacks on cnbc I'm not sure who else would predict this sort of return going from the current market valuations.  If you're using 0.2% as your expense ratio the only funds that would fit this are mostly us index funds -- it's been quite a while since sophisticated investment types have recommended anything like a portfolio 100% in an s&p index and/or expected 10% from such a portfolio.

2. This being said, the projections can change wildly if you adjust the return down to a more reasonable level of 7%, or 5%. This would add years to the time until you get to retirement and require a much higher nest egg to allow for 100% safe withdrawal.

3. The study reports that there's little difference to retirement between someone making $30,000 and sombody making $100,000 or $200,000.  Well, this goes without saying if the $100,000 earner continues to spend a similar percent of his/her salary as the $30,000 earner.  But LBYM is usually an integral part of retiring early and the big earner can quite easily save a MUCH higher percentage of his/her salary.  The methodological mistake here is clear.

It's a worksheet. You can input any expense ratio or investment return you like.

intercst

 

[brewer12345]

Interesting. I tried a range of scenarios including different return and inflation numbers and basically got about what I had always thought (I am 12 to 15 years away from retirement with not unreasonable assumtions). The real innaresting thing is that when I vary the % safe choice, I go almost no difference in when I could retire. That seems pretty counter-intuitive.

Of course, all the assumptions I plgged in don't include pretty major things, like funding college for the kids or selling a paid-off house to move somewhere cheaper, but its a good start.

 

[dancalio]

It's a worksheet. You can input any expense ratio or investment return you like.

intercst

I was just referring to the original study linked above the calculator link.

 

[intercst]

I was just referring to the original study linked above the calculator link.

The 10% return in the original study is the average for the S&P500 over the last 75 years.

intercst

 

[dancalio]

The 10% return in the original study is the average for the S&P500 over the last 75 years.

intercst

Do you assume I don't know that? It's no secret that given the still high valuations many intelligent commentators (Stein and DeMuth, Shiller, Grantham, and more) foresee lower returns at least for the medium term. One should especially try to be conservative given the fact that we're talking about a retirement calculator.

 

[hocus]

One should especially try to be conservative given the fact that we're talking about a retirement calculator.

I agree.