Diminishing Returns on Retirement Planning Time?

[LateToFIRE]

I quit planning once I decided to retire. No need to. The decision was made.

+1, exactly how I'm thinking about it. Someone recently asked if I thought I had enough to retire within next few years. I just laughed and said, at this point doesn't matter - its gonna have to be enough.

 

[sakowitzm]

This reminds me of my favorite username on a different forum, “Doneisbetterthanperfect ”.

My family keeps it very simple. "Done is better than not done." Comes in handy ALL the time! And when it's not that, we go with "Easy is good."

 

[ksr]

Before I retired I would fret about all the things that could go wrong, generating large unexpected expenses. At some point it hit me that yes, I did need to prepare for a large unexpected expense at any time, but it was highly unlikely that *everything* would go wrong in the same year. At that point I just made sure I had a reasonable buffer, and I relaxed somewhat.

 

[Retch The Grate]

Some of us like using retirement calculators and spreadsheets in retirement just because we love numbers and like playing around with them.

Or in some of our cases we just do the mental math (with a very simplified set of assumptions) over and over in our head because apparently our brain is compulsive in that way.

 

[Sojourner]

Some of us like using retirement calculators and spreadsheets in retirement just because we love numbers and like playing around with them.

+1

I run my numbers through FIRECalc and one or two others at least once a year, mostly as a sanity check on my SWR. It feels good to see that what DW and I are actually spending is lower than what the 100% historically-safe SWR is. IMHO, that sort of occasional validation and course correction (whether it's of the "can spend more" or "should spend less" variety) is quite valuable.

 

[Dtail]

+1

I run my numbers through FIRECalc and one or two others at least once a year, mostly as a sanity check on my SWR. It feels good to see that what DW and I are actually spending is lower than what the 100% historically-safe SWR is. IMHO, that sort of occasional validation and course correction (whether it's of the "can spend more" or "should spend less" variety) is quite valuable.

Agree, but a few times a year for me. More so to play with the "What if" scenarios.

 

[Midpack]

Like others here, before I retired I tried out every retirement calculator I could find, and spent many hours developing and tweaking my own very detailed spreadsheets as well. Those exercises were mostly between 2008 and 2015 or thereabouts and I was absolutely certain it was great use of my time, probably derided others who didn’t “do the work.”

I learned a lot so it wasn’t a total waste of time but…I came to realize trying to precisely plan for retirement financially was a big waste of time.

If you have 25 times your initial expected spending after other income, you’re probably good if you’re planning on 30 years and your AA isn’t overly conservative. I’d spend a lot more time figuring out a realistic retirement spending plan, e.g. health care, large infrequent expenses, travel, etc. How much will you really want/need to spend?

There is no precise plan you can count on - none. There are too many variables you can’t possibly predict. You’d better plan on some slop before you pull the trigger, and be prepared to course correct every 5 years or so while retired. You may have too much, or have to live less large.

I retired in 2011. Now that it’s 2023, I am more convinced than ever precise retirement $ planning is using a scalpel where an axe is much more appropriate.

 

[JJpop]

Retirement calculators are invaluable. The more detailed the better. Answering all those minute questions will force you to understand what you’re getting into. And, a good amount of conservatism is warranted. But, this is all pre-retirement. Since retirement I have not used a retirement calculator. I monitor my portfolio value and pay attention to situations like last year when the market let us down, bonds especially, but as long as my portfolio stays above a certain level, I’m comfortable the plan is working and I go about other things.

I did all our retirement planning with a pen and paper, basic math and a calculator at times.
People make it much more complex than it is.
It is mostly common sense for most people.
If one has a very complicated life your retirement will also be more complicated.

 

[meleana]

I quit planning once I decided to retire. No need to. The decision was made.

THIS!

You live with what you've got and enjoy life.

 

[bonvoyage]

I have used the Fidelity retirement calculator and Pralana Gold. Both of these are very good retirement calculators since they take taxes into account. We actually have more in our taxable accounts than our tax deferred accounts. It was very useful for doing what-if scenario explorations.
That said, after I started using them, I realized that extreme precision is simply not possible due to the number of variables out of my control. Basically the main thing I learned is that we have saved up a lot - far more than we need. At that point I put away the calculators

 

[Badger]

At first I was convinced that I would never be able to retire. We lived on one paycheck while teaching in a state that is 4 from the bottom in salary. I didn't know anything about investing so we saved everything we could, lived and invested conservatively, and ran Firecalc and other retirement planning programs often before retirement. I didn't trust that we would ever have enough money unless all programs said 100% in all scenarios if SS and Medicare/Tricare were no longer available.
We retired in 2011/2012 and have not bothered to check Firecalc since then. I wasn't considering that SS, small pensions, and not having to pay for medical insurance would allow us to live like we had been when saving half of our income.
Sometimes even being ignorant of personal finance when younger won't be a problem if you are willing to work with what you have and use a bit of common sense.

Cheers!

 

[Andre1969]

My guess is that once you're retired, as long as your portfolio is doing fairly well, there's no need to keep re-running a retirement calculator, because you're probably subconsciously doing it in your head.

Even if you're not running numbers through a retirement calculator, I imagine most people are probably still checking their net worth/invested asset value every so often. Once you're retired, unless something substantial changes, I'm guessing that if you have a rough idea of what you have, and a rough idea of what you're spending, you just know you're on track, without having to re-run the calculator.

I have a friend who's a teacher. His retirement maxes out at something like 54% of his best three years. He's complained in the past about how that pension sucks, and how rough it's going to be once he retires. But then I've reminded him that, right now, he's paying into SS/Medicare. That's what, 7.65% combined. PLUS he has to pay into that pension plan, which is another 7%. Then on top of that he does whatever the teacher version of a 401k is (Thrift Savings Plan or whatever? I always get the jargon wrong when it comes to government-type employees). Plus, once SS starts paying out, I've told him he'll probably be making what he does now.

 

[jollystomper]

I am used many retirement planners before I retired. While they gave a good "big picture" assessment, for detailed planning I only focused on the first 5 years. This mainly consisted of me looking at my previous 5 and 10 year expenses as a base for creating my inflation adjusted expenses estimate for the first 5 years, and seeing how much cash I need to supplement pension income to cover it. I made the plan conservative, as I did not include any of DW's income to avoid being dependent on it (so that she could choose to reitr whenever she wanted), and I used the lowest taxable interest/dividend income from my previous years to forecast for the future. My main goal was to not be forced to sell equities during that time.

Now that that plan has expired, I am working on the next five year plan. Worrying about if our money will last is no longer an issue. My long term plan focuses more on the future impact of RMDs to our finances. I play a bit with the retirement planners to see, based on what we set aside for LTC self-insurance, what will be left for our heirs. It is also useful for determining when to start making regular, larger gifts to them.

I also play with a spreadsheet as my not yet taken SS changes due to inflation, to see when it plus my pension survivor benefits exceeds $100K for annual income, as I see that, based on all our assets, as a good mental "floor" to have for whomever survives the other in our marriage.

 

[Koolau]

Agree, but a few times a year for me. More so to play with the "What if" scenarios.

Yep. After 18 years retired, I only sweat the few remaining "what ifs." Everything else is in place and functioning as planned/expected. No big decisions remaining except end-of-life kinds of things. YMMV

 

[pacergal]

I ran all the retirement calculators I could find prior to retirement. I run Firecalc maybe once a year now.
We keep our budget to one pension and both SS, the other pension goes into what we call our "spendable savings"--a savings acct that we use for travel or other unusual expenses in the year. I remember my Mom telling me how much farther money went when kids are grown and out of the house. This is true for us now also!
Our investment monies are for LTC, or any BTD type needs we can't cash flow, along with inheritance for kids.

So far, it is all working out fine. The planning and calculators have done their job, and we are enjoying retirement.

 

[Echard]

I have a deep set of spreadsheet tabs that track retirement funds in many different ways: bond ladders, stock investments by sector, market cap, investment thesis, stocks vs bonds vs alternative assets, security type, etc.

However, the one thing I couldn’t model easily was future returns that take into account the variability of the market. While the long term returns of stocks might be 7-8%, for example, you can’t just plug that into the spreadsheet model. You have to model variability because it will impact greatly the odds of running out of money or not. The impact of variability is significant and can’t be ignored in many retirement scenarios.

So for that reason I use financial calculators to run Monte Carlo analyses. However, I make sure to throughly understand the calculator assumptions. Many, for example, currently project far too optimistic projected returns from stocks. Given market valuations, a 10-11% return from stocks would seem to be far too optimistic. I like calculators that let you adjust the projected returns and then run Monte Carlo analysis on that projected return. Also, I model sequence of returns risk to see the results too.

Unlike most, I never sat down and tried to fully understand all of the math of retirement planning while I was working. I simply saved as much as possible and then accidentally fell into retirement due to a health issue. At that point I then dove in deep into investment management and planning. Fortunately we had saved enough.

 

[Koolau]

I have a deep set of spreadsheet tabs that track retirement funds in many different ways: bond ladders, stock investments by sector, market cap, investment thesis, stocks vs bonds vs alternative assets, security type, etc.

However, the one thing I couldn’t model easily was future returns that take into account the variability of the market. While the long term returns of stocks might be 7-8%, for example, you can’t just plug that into the spreadsheet model. You have to model variability because it will impact greatly the odds of running out of money or not. The impact of variability is significant and can’t be ignored in many retirement scenarios.

So for that reason I use financial calculators to run Monte Carlo analyses. However, I make sure to throughly understand the calculator assumptions. Many, for example, currently project far too optimistic projected returns from stocks. Given market valuations, a 10-11% return from stocks would seem to be far too optimistic. I like calculators that let you adjust the projected returns and then run Monte Carlo analysis on that projected return. Also, I model sequence of returns risk to see the results too.

Unlike most, I never sat down and tried to fully understand all of the math of retirement planning while I was working. I simply saved as much as possible and then accidentally fell into retirement due to a health issue. At that point I then dove in deep into investment management and planning. Fortunately we had saved enough.

I hope I'm not sounding critical, but if you have saved enough (and you obviously have a plan - asset allocation with balancing) why are you still running analysis (with Monte Carlo, etc.)

If you have convinced yourself that you can remain retired, I would concentrate on living retirement and not worry too much about your functioning plan. I always found other things to worry about once I had my plan established. A tweak here and there every year (including balancing - calculating Net Worth) and I'm good for the year. Again, please don't interpret as criticism. Just wondering why the detail post retirement. As always, YMMV.