Calculator for retirement expenses

[wrichards58]

what is a good calculator for estimating what I will need in retirement? thanks

 

[REWahoo]

what is a good calculator for estimating what I will need in retirement? thanks

No calculator does this accurately - retirement expenses are unique to your personal circumstances. You need to have a good understanding of what your current living expenses are, then estimate how they will change when you retire (reductions for commuting, clothing, etc., increases for travel, hobbies, etc.).

 

[NW-Bound]

Although I have always been frugal and practiced the LBYM philosophy, about 3 years ago, I realized that in order to retire early, I need to know my expenses. I never did care before, because I always underspent my income and had plenty left over for savings. But what was LBYM before may not be true anymore, once my means (read income) are curtailed down to the 3.5%WR I can get from my investments.

I have been using Quicken to track both my portfolio and expenses, but I am sure that there are other programs that are equivalent. Knowing my current expenses will allow me to tweak the budget to fit that 3.5%WR.

As of today, Quicken says that my expenses in the last 12 months are 3.25% of total investment. I do not care about individual items as much as knowing what the total is. The healthcare cost, i.e. insurance premium and deductibles, is something that I do not have any control over, but the rest I can tweak if necessary.

 

[FANOFJESUS]

Here is the one I use. It is for everyone but works for retired folks too. I love it.
Home Budget Analysis - Dinkytown.net Financial Calculators

 

[pb4uski]

There are a couple things you could do. First would be to do an in-depth analysis of what you spent over the last couple years and adjust that spending for how you think it will change once you are retired. Another would be to look at your take home pay less what you saved - presumably the difference is shat you spent in total.

Like NW-Bound, I had the benefit of being a long-time Quicken user so had some pretty solid information to go by.

 

[Animorph]

Quicken of course. Otherwise, take your current income and subtract off all the stuff you won't need in retirement. Add in all the new costs you will have in retirement.

Some possible subtractions:
SS and medicare taxes, retirement savings, mortgage and other loans paid off, driving to work, work related expenses, disability/life insurance premiums, kid related expenses...

Some possible additions:
health/dental/vision insurance, extra travel and activities, long-term care, paying for things you can't do by yourself anymore...

And of course the federal and state taxes you pay will change depending on your sources of income and their absolute levels.

I'm sure you have a few other things specific to you, and others here can help me out with all the things I missed.

As you can see, no one can do this for you. But hopefully we can suggest many things to think about.

 

[Loving Life]

As I have been retired for 5 years - and a little anal on my portfolio and expenses tracking - a few things I have noticed 1) most of your actual expense costs before retirement will remain - (Living expenses, clothing, food, travel, even gas for the truck) 2) hobbies will pop up that you have never considered but now will try and pick up 3) Doing things with other - costs will rise, doing things/meals/ travel with old and new friends will be increasing

After 5 years, cost have started to decrease, but are still elevated from pre-retired costs.

The bottom line is that once you figure out what you spend (quicken) then budget and increase. Mine is running about 130% of pre-retired costs.

 

[Amethyst]

We expect to have higher costs in retirement, due to higher health costs and the need to hire other people to do chores and tasks we now do ourselves.

Additionally, our pensions are fully taxable (will stay in same marginal bracket even though income will be reduced ~30%); we'll lose our 401K tax advantage, and our health insurance premiums will no longer be deductible. Eventually, too, somebody is going to need long-term care.

On the other hand, the need to save for retirement will no longer apply, although we'll still need to fund/replace an emergency fund, replace car/appliances/home expenses and so on.

I've tried various ways to figure it all out, though it ain't easy. A friend gave me a tax spreadsheet for our state and county, which has helped me calculate how much we would save by moving to a non-tax state. Then, that has to be weighed against the real and intangible costs of moving.

After running the numbers this way and that, I am in the same ballpark with Loving Life - our expenses will move around 25% higher once I retire (not instantly, but over time), which we should be able to offset by a) saving less and b) calling on investments as necessary. In fact, I am working a bit longer than originally planned, to beef up the investments.

Lastly - 2012 is the first year since I started tracking expenses (2009) that I've noticed a significant uptick in grocery costs. We have been adapting/substituting all along, and have run out of room in that respect. There is some additional consumption going on - but I save old receipts, and virtually every item is up 20% or more from a couple of years ago. Coffee and peanut butter are up 40%, and produce has been hit with the Shrink Ray - the 5 pound bag of onions at the box store is now a 3 pound bag, for example. Interestingly, ice cream, which got "shrunk" around 2010, is now going for almost the same unit price as 2010 when bought on sale. Overall our grocery bill is running 15% over this time 2011.

Amethyst

 

[dessert]

what is a good calculator for estimating what I will need in retirement? thanks

wrichards58, your question has been answered by some very wise folks who know what they are talking about. Each response was right on the money.
You won't know how much you need to retire until you know what you are currently spending. Next step is to see if any of those expenses will go up or be reduced. That will be your base line. Then figure what additional activities you will do once you are retired like travel, hobbies, etc. Now you will have your answer.
Then understand what income you can generate to cover it all and you are all set to retire. Good luck to you.

 

[obgyn65]

+1. There are many posts about how to do just this.

No calculator does this accurately - retirement expenses are unique to your personal circumstances. You need to have a good understanding of what your current living expenses are, then estimate how they will change when you retire (reductions for commuting, clothing, etc., increases for travel, hobbies, etc.).

 

[Midpack]

There are a couple things you could do. First would be to do an in-depth analysis of what you spent over the last couple years and adjust that spending for how you think it will change once you are retired. Another would be to look at your take home pay less what you saved - presumably the difference is shat you spent in total.

Like NW-Bound, I had the benefit of being a long-time Quicken user so had some pretty solid information to go by.

+1. The only way I'd trust is to first know exactly what I'd been spending for the last few years, and then considering how each expense type would change in retirement. I've only been retired for 17 months, but it's worked well so far. And predicting expenses for 10-20-30 years is probably impossible whether you're retired, working or other...probably wise to be flexible and build in some contingency plans.

 

[Khufu]

Lastly - 2012 is the first year since I started tracking expenses (2009) that I've noticed a significant uptick in grocery costs. Overall our grocery bill is running 15% over this time 2011.

Amethyst

What percent of your household budget is groceries? In retirement groceries are 5.5% of our household budget. So an increase of 15% in food would add about 75 basis points to our annual inflation rate. Pretty insignificant. At the same time, rent which is about 30% of total household expenditures did not rise at all in the last year.

People habitually overweight groceries because they make more food spending decisions in a month than most other kinds of expenditures. But that's just a kind of availability bias. Best to train yourself to focus on the large expenses.

 

[pb4uski]

....Lastly - 2012 is the first year since I started tracking expenses (2009) that I've noticed a significant uptick in grocery costs. ....

Do you have a garden? DW likes to garden and we have an abundant supply of vegetables during the season. We know of a retired couple who have a good sized garden (~30x30) and it provides a significant part of their food (and enjoyment).

 

[Amethyst]

What percent of your household budget is groceries? In retirement groceries are 5.5% of our household budget. So an increase of 15% in food would add about 75 basis points to our annual inflation rate. Pretty insignificant. At the same time, rent which is about 30% of total household expenditures did not rise at all in the last year.

Fair point. We have much more expensive bills than our grocery bill. Yet everyone must eat, wash, etc., so that increases in the grocery bill are a bit threatening.

People habitually overweight groceries because they make more food spending decisions in a month than most other kinds of expenditures. .... Best to train yourself to focus on the large expenses.

Oh dear. More mandatory training! And I may be no fashion model but I am NOT habitually overweight.

 

[Amethyst]

We had a lovely garden and fruit trees for several years, but pillaging deer forced us to put it behind fencing, and then stink bugs came along and ruined the rest. The stink bugs are resistant to all but the strongest pesticides - it just stopped being something we wanted to do.

Amethyst

Do you have a garden? DW likes to garden and we have an abundant supply of vegetables during the season. We know of a retired couple who have a good sized garden (~30x30) and it provides a significant part of their food (and enjoyment).

 

[Finance Dave]

what is a good calculator for estimating what I will need in retirement? thanks

I suggest running the below in addition to FIREcalc and then coming to a "consensus" among them...no one calculator will give you the "right" answer...as others have mentioned there are numerous variables and assumptions that go into each one.

One of the key features I look for is whether I can change my investment return rate upon retirement...some don't allow you to do that.

Monte Carlo Retirement Calculator

Planning Tools - Retirement Calculators

Personal Finance: Money 101 - Planning for retirement

Retirement Income Planner - Fidelity

 

[gerntz]

Just close your eyes & pray.

 

[Birchwood]

We figure we will be spending about 20-25% more annually in retirement than when we are working. We live much below our means now, and we hope the combination of savings and retirement fund can support this total expenditures.
-Daily maintenace,clothes, food, etc will remain the same.
-Cost of daily travel will be the same.
-Vacation trips, road trips will dramatically increased.(This is the cause of 25% increase._)
-Will spend another 5K for hobby equipments etc.

 

[Finance Dave]

We figure we will be spending about 20-25% more annually in retirement than when we are working. We live much below our means now, and we hope the combination of savings and retirement fund can support this total expenditures.
-Daily maintenace,clothes, food, etc will remain the same.
-Cost of daily travel will be the same.
-Vacation trips, road trips will dramatically increased.(This is the cause of 25% increase._)
-Will spend another 5K for hobby equipments etc.

I agree with the vacations and hobbies. Won't your house be paid off though? Also think of all those senior citizens discounts.

 

[Birchwood]

House is paid in full. If we move to another state, will have to fork out about 50K as downpayment and have a mortgage while waiting for our present house to sell. Then we will pay the new house cash. The idea is to down size!
Even with a mortgage, that's still within the + 25%.

All three vehicles are also paid in full. ( one two yrs old, one 4 yrs old and, and 5 yrs old) all in relatively low miles and properly maintained. Will have to use them until almost the wheels will fall off. Can use them for road trips.

Early birds specials- We'll hit that too. Senior sitizen discount, we'll use that too.
I don't eat that much- Junior meals anyone? smaller portions?

I eat P&J sandwich &apple for lunch and wife cook for supper. That's OK

The road trips will cost about $100/day.
A cruise about $5000/ trip
A foreign plane trip, about $4000/ trip
Camera hobby $5000 every 5 years.

 

[pb4uski]

I suggest running the below in addition to FIREcalc and then coming to a "consensus" among them...no one calculator will give you the "right" answer...as others have mentioned there are numerous variables and assumptions that go into each one.

One of the key features I look for is whether I can change my investment return rate upon retirement...some don't allow you to do that.

Monte Carlo Retirement Calculator

Planning Tools - Retirement Calculators

Personal Finance: Money 101 - Planning for retirement

Retirement Income Planner - Fidelity

I stumbled across this one today - which was new to me.

https://retirementplans.vanguard.com/VGApp/pe/pubeducation/calculators/RetirementNestEggCalc.jsf

 

[Finance Dave]

I stumbled across this one today - which was new to me.

https://retirementplans.vanguard.com/VGApp/pe/pubeducation/calculators/RetirementNestEggCalc.jsf

Yes, I have a VG account and have seen that one. I have a few more somewhere....but those were easy to put my hands on.