Another Interesting Retirement Calculator

[RobbieB]

Blowin' that dough isn't for the timid! Takes willful abandon and lust for life.

Dying broke is not something I worry about.

 

[NW-Bound]

Well, with that WR you can buy the BIG RV and hire a full time driver!

Hah! Big RVs are not for me anyway.

I tried to talk my wife into a new class B based on the dually-rear-wheel Sprinter chassis, and she asked "what's wrong with our class C now?"

That's a fraction of the 9%WR, and it would be for just one year.

I guess if I really want one, I will tell her I am going by myself on a trip, take a flight to an out-of-town dealer and drive one back.

 

[NW-Bound]

Blowin' that dough isn't for the timid! Takes willful abandon and lust for life.

Dying broke is not something I worry about.

I dunno. I can only eat and drink so much.

And even with travel, it can be tiring too, unless I can have enough to charter a jet, which is only in my dream. And then, I like to travel on my own, do my own driving and hiking/walking around, and that requires health more than money.

At some point, just staying home to surf the Web and playing with my electronic projects is enough, and I am getting to that point.

 

[triangle]

Nice calculator, thanks for posting. That website had another interesting calculator for those looking to retire early for an indefinite number of years. Example of someone with 1 Million saved, spending 4K per month, and assuming a withdrawal rate of 3.5%:

https://engaging-data.com/freedom-calculator/?sav=1000000&spend=48000&wr=3.5

 

[Midpack]

Nice calculator, thanks for posting. That website had another interesting calculator for those looking to retire early for an indefinite number of years. Example of someone with 1 Million saved, spending 4K per month, and assuming a withdrawal rate of 3.5%:

https://engaging-data.com/freedom-calculator/?sav=1000000&spend=48000&wr=3.5

Thanks, that is interesting. I clicked on the home page and found LOTS of calculators, most not retirement related. New to me.

I just redid our numbers using the Rich, Broke or Dead calculator from the OP, and got end of plan portfolio probability percentages of:

Inflation adjusted:

• 2% less than original portfolio
• 63% greater than original portfolio (LT 2X)
• 35% more than 2X greater than original portfolio
• 0% more than 5X greater than original portfolio

Nominal:

• 0% less than original portfolio
• 3% greater than (LT 2X)
• 65% more than 2X greater
• 32% more than 5X greater

Just another way to view/slice the outlook.

Out of curiosity I also looked to see when I'd be dead for certain, assuming it would never show 100% - but it came back at 106 years old.

 

[Momcpa]

Thanks for the calculator page link. I enjoyed even just the first page. I sent it on to my adult son who has really gotten into saving, and cash projections, and possibly early retirement.

 

[ERD50]

I disagree. Keeping the probability of death active visualizes something we all know but actively do not acknowledge.
The Reaper is waiting. You do not have to plan for eternity.

I can't agree with this at all. The math sounds right, but it makes no sense to apply that math to this case.


I'll use an analogy I've used before. Imagine you have a very important meeting in two days @ 11AM. Due to previous, important events, you can't leave before 10 AM.

You figure you only have a 10% chance of making it to the meeting on time. Now you notice the gas in your tank is low. You calculate have a 10% chance of running out of gas on the way to this important meeting.

Do you discount the need to fill up your tank, based on the fact you probably won't make it to the meeting anyhow? Of course not. You plan for the case that you do make it to the meeting, and you try to remove other obstacles.

For most, planning for age 100 is not that much more portfolio/less spending than planning for 90, so it's not a huge obstacle.

-ERD50

 

[GravitySucks]

If I hit the 75% chance I should be dead age I'll cut back my spending. It'll mean a boring life from 85 on, but that's the price I'll pay.

I can't agree with this at all. The math sounds right, but it makes no sense to apply that math to this case.


I'll use an analogy I've used before. Imagine you have a very important meeting in two days @ 11AM. Due to previous, important events, you can't leave before 10 AM.

You figure you only have a 10% chance of making it to the meeting on time. Now you notice the gas in your tank is low. You calculate have a 10% chance of running out of gas on the way to this important meeting.

Do you discount the need to fill up your tank, based on the fact you probably won't make it to the meeting anyhow? Of course not. You plan for the case that you do make it to the meeting, and you try to remove other obstacles.

For most, planning for age 100 is not that much more portfolio/less spending than planning for 90, so it's not a huge obstacle.

-ERD50

 

[BeachOrCity]

They are multiple roads to a financially successful retirement. I think it is useful for people contemplating when to pull the trigger to view the finances of it multiple ways. By having multiple ways of viewing it, one increases their own comfort level, and in doing do decreases risk, by understanding what it all means. Three ways I look at things include:
1. Liberal way. (This threads calculator). Rich, Broke, or Dead. It shows clearly for most that by using a relatively safe withdraw rate one is far more likely to die than run out of money. Results in one thinking "life is short".
2. Moderate way. (Historical view). Basically firecalc. Fairly conservative, but relies on history to guide. What if the future is completely different (worse) than history?
3. Super Conservative way. (Monte Carlo). Basically using a random returns generator, combined with standard deviations to generate random events. Can help one see there are possible black swans. Can use "Flexible Retirement Planner" to do this. Requires the most knowledge and skill to use. Caution "Garbage in = Garbage out" (if you don't understand the numbers you enter, your results won't have valid meaning).

Everyone is different in their risk and comfort levels, but I think trying all three can give one a well rounded perspective.

 

[ERD50]

If I hit the 75% chance I should be dead age I'll cut back my spending. It'll mean a boring life from 85 on, but that's the price I'll pay.

And I choose to plan for the case where I/DW turn 85 and need to spend more for our care. We might need to pay for many services, or for in-home care in order to maintain a decent quality of life.

I've seen that happen as people age. I'm not going to ignore it. Life can be miserable in old age w/o the resources for things to bring comfort.

-ERD50

 

[Perryinva]

Yup. It’s funny how people have less of an issue spending their savings in fun stuff, or food, etc, but begrudgingly when it is for payment of services such as health care or LTC which acknowledges that your life is nearing the end.

My father in poor health is in a fit when we talk about paying for CCF or even daily nurses above what his SS and Medicare cover. He doesn’t want to “waste” his savings. The fact that he doesn’t have much longer to live and THAT is what the savings is for is entirely over his head.

 

[Perryinva]

I don’t understand some of the calculator. Why does it show 14% withdrawal rate when I input my numbers with a 2.2% WR? That makes no sense. Unless it is because I inputed an added $50k expense (added amount for HC/LTC) starting at age 85?

 

[pb4uski]

Yup. It’s funny how people have less of an issue spending their savings in fun stuff, or food, etc, but begrudgingly when it is for payment of services such as health care or LTC which acknowledges that your life is nearing the end.

My father in poor health is in a fit when we talk about paying for CCF or even daily nurses above what his SS and Medicare cover. He doesn’t want to “waste” his savings. The fact that he doesn’t have much longer to live and THAT is what the savings is for is entirely over his head.

I had a great-uncle who was a miser.... living with a 4-burner stove with only 2 working burners was a badge of honor in his mind.

His wife died first and he did well for a while but as his health declined it became apparent that he needed to into a nursing home because he could not live on his own. He refused because he had money and it would "cost too much". Ditto with help in the home. End up living a horrible last few months, sometimes in his own feces. Totally stupid.

So now rather than going to pay for his care in his last months of life some of that money is going up his addict grand-daughter's nose.

 

[Which Roger]

Yup. It’s funny how people have less of an issue spending their savings in fun stuff, or food, etc, but begrudgingly when it is for payment of services such as health care or LTC which acknowledges that your life is nearing the end.

I've observed the same thing among people who are around ER age. They continue to work because they "need the cheap health insurance", even though they clearly are in a financial situation where they could bear the full cost. But to me, health insurance is just another expense, no different than any other kind of spending.

 

[Al18]

Thanks for posting. I remember discussion of this site 3-4 years ago and the death wedge.



I calculated for a 25% reduction in SS as a high end at just over $100K withdrawals per year. I also calculated for loosing the state pension and 25% reduction in SS as a low end at just over $70K per year. I retired at the beginning of this year and currently withdrawing at the low end plan.

 

[NW-Bound]

I had a great-uncle who was a miser.... living with a 4-burner stove with only 2 working burners was a badge of honor in his mind.

His wife died first and he did well for a while but as his health declined it became apparent that he needed to into a nursing home because he could not live on his own. He refused because he had money and it would "cost too much". Ditto with help in the home. End up living a horrible last few months, sometimes in his own feces. Totally stupid.

Hey, we only use 2 out of the 4 burners of our stove. I assume the back 2 are still working, but I do not need them.

However, I will pay for my comfort later. I have told my wife that instead of dying at home, I may just go into a home to die there, and spare everyone the hassle of dealing with me.

 

[RobbieB]

I use all my burners (4) some of the time and 3 a lot of the time.

I just don't get misers. Rather die in agony than pay someone to take care of them.

Amazing.

 

[Major Tom]

I just don't get misers.

I get it. The very same frugal habits that help people save, can often make it hard for them to spend in retirement. I think many here have experienced it in one way or another, though hopefully none of us take it to the extremes where we are making ourselves miserable, or risking our health.

 

[street]

I like that a lot, thanks.

 

[NW-Bound]

I use all my burners (4) some of the time and 3 a lot of the time...

Come to think of it, we have not used 3 burners in a long time. But when preparing food, we often have 1 or 2 burners going, plus the air fryer or a toaster oven, and the microwave.

Even when having a party, I can have 3 toaster ovens going in addition to the dual-oven stove (a total of 5), but often just 2 burners on the stove top.

 

[HI Bill]

I use all my burners (4) some of the time and 3 a lot of the time.

You must be a more talented cook than I am. I can only handle two at a time!

 

[SnowballCamper]

Yup. It’s funny how people have less of an issue spending their savings in fun stuff, or food, etc, but begrudgingly when it is for payment of services such as health care or LTC which acknowledges that your life is nearing the end.

My father in poor health is in a fit when we talk about paying for CCF or even daily nurses above what his SS and Medicare cover. He doesn’t want to “waste” his savings. The fact that he doesn’t have much longer to live and THAT is what the savings is for is entirely over his head.

I think that is what the graphic with the death wedge obscures.

When I hover over it near the end, it will have something like 70% dead, 10% over 2x, and 20% over 5x. Then when I turn off the death wedge I suddenly have 40% over 2x, and 50% over 5x.

This conflates life and money, two entirely different things, into the same probability space. As a result, a user is more likely to accept more risk in their retirement planning, because hey, I'll be dead and it won't matter. On the other hand, someone who stresses too much about having enough sees that s/he only has a 30% chance of having enough money (wedge on) when it is actually closer to 90% (wedge off).

The probability of death at a specific age is generally independent of the projected returns for your investments. Putting these two different things on the same scale is misleading.

 

[Perryinva]

I agree. You are either dead or alive. Unlike in the Princess Bride, you’re not “only mostly dead”. The older you get, the better handle on how the future looms for your longevity. Pre 60, it is easy to say, “when I am 85....”. At 70, it then changes to “if I get to 85”, then so on. We all know it can change at the drop of a hat.

 

[Tyrone]

Didn't work for my/our situation. We continue to work p.t. for the next couple years, so I put that in, but I didn't see a spot to plug in two future s.s. incomes. Did I miss something?

 

[tb001]

I've observed the same thing among people who are around ER age. They continue to work because they "need the cheap health insurance", even though they clearly are in a financial situation where they could bear the full cost. But to me, health insurance is just another expense, no different than any other kind of spending.

It is until you can’t get it. I think many people are afraid of potentially losing health insurance or it becoming far more costly than they expected, for good reason. Even with great insurance through my job our medical costs this year have surprised me and have me revising our budget in that area. For many, especially if you’ve always been covered through an employer, it feels like a big unknown.

That said, I agree with you that there’s a tendency to stay for insurance that is probably more rooted in psychological reasons than financial ones. It’s a big shift in thinking to see healthcare as a legitimate cost worth paying for and not as ‘free’.