How much do you trust online retirement calculators?

[Dtail]

No, not for you at 61 IMO.

I think if you are closer in SS eligible age it makes sense to include it. If you are decades away using a low number might be better. I used 0% because I retired 3 decades before I expected to receive SS and like you the whole situation looked so murky back then. If you retire quite early it’s a good idea to be very pessimistic about future income streams.

Agree. Anyone over 60 to exclude all of SS just to be conservative is being just that. At most I would take the 23% haircut.
Some of these folks then artificially up their expenses by let's say 25%.
What is the purpose then of using a retirement calculator? Just for stress testing, fine, but doesn't really serve a useful results oriented purpose by artificially being way too conservative.

 

[Dtail]

I have tweaked Fidelity inflation rate by using more medical expenses (4.9% inflation rate) and less discretionary expenses
(2.5%). Gives me a more conservative ( for me) 3.2% inflation rate. I also omit around 7% of our portfolio since market is at a peak. Hopefully pleasantly surprised down the road.

Just to note that Fidelity already takes an approximate 7-8% portfolio haircut the first year.

 

[JoeWras]

Well I guess my little disclosure generated some interest and even a little name-calling, haha. Oh well.

Just to be clear, I currently assume SS will be there when I am ready to claim. But going way way back to when I was a young tyke dreaming of retiring early, I assumed any SS would just be gravy. I did not know how long I would work, but knew I would not have a pension. So personal saving and investing were key. And so it was not in my base planning case until say around 50, when I began to view it as longevity insurance. I still do.

Same for me. I like to assume 0% to see if I "pass," and I if do, then I turn it back on to add some icing to the cake. I just don't know where it is going. My guess is for my gen, SS will be probably about 80% of what is expected, although that will be done by some obfuscated means and re-jiggering of things under the covers.

I was also a tyke during the last big SS redo in the 80s. I followed it, and it seemed insufficient then. Hence my concern.

I hope you don't mind if I join you in the club of SS ignorance.

 

[motley]

I'd bet my entire portfolio that SS isn't going away in our lifetimes and then some. I do think it likely to be reduced and a good chance of that in our lifetime (varies with age of course).

 

[Lewis Clark]

By the way, MOST stories I've seen suggest the 4% rule is TOO conservative. Most people can get away with a higher withdrawal rate - especially if they are willing to cut back during the "down turns." YMMV

The 4% guideline was developed to be a safe withdrawal rate during most of the past retirement dates with a 30-year retirement. The success criteria is to have a final balance greater than zero.

If someone retired during one of the worst-case scenarios they would have run out of money following this guideline.

If someone retired at a time that is NOT a worst-case scenario, this guideline would have been conservative. If someone retired at one of the best-case scenarios, their inflation-adjusted ending balance would have been much more than the initial balance.

Take a look at the work at EarlyRetirementNow.com about flexibility.

The Safe Withdrawal Rate Series - Early Retirement Now

One of the most important topics in financial planning is how to transform an initial portfolio into a safe and sustainable retirement income stream. I’ve put a lot of thought into this topic and published 50+ posts on my blog. To make my research more accessible, I created this “landing page”...

earlyretirementnow.com

See parts 23, 24, 25 and 58. Many folks don't appreciate how far they might have to cut back, or for how long, if they experience a bad sequence of returns.

 

[brett]

I did not even agree with my employers outsourced pension admin calculation of my DB entitlement.

My pay for performance bonus' were not included in my earned income for pension purposes.

I reviewed the pension plan documents and the successive DB pension plan amendments. One hour...three reads.

I contacted the plan sponsor and persued the issue.

Six months later it was resolved in my favor. The result was a 30 percent increase in my DB pension entitlement. And a 3 percent penalty for taking in at 61 instead of the normal age of 62 vs the 5 percent penalty that the admin was attempting to apply.

Trust but verify!

 

[Dtail]

The 4% guideline was developed to be a safe withdrawal rate during most of the past retirement dates with a 30-year retirement. The success criteria is to have a final balance greater than zero.

If someone retired during one of the worst-case scenarios they would have run out of money following this guideline.

If someone retired at a time that is NOT a worst-case scenario, this guideline would have been conservative. If someone retired at one of the best-case scenarios, their inflation-adjusted ending balance would have been much more than the initial balance.

Take a look at the work at EarlyRetirementNow.com about flexibility.

The Safe Withdrawal Rate Series - Early Retirement Now

One of the most important topics in financial planning is how to transform an initial portfolio into a safe and sustainable retirement income stream. I’ve put a lot of thought into this topic and published 50+ posts on my blog. To make my research more accessible, I created this “landing page”...

earlyretirementnow.com

See parts 23, 24, 25 and 58. Many folks don't appreciate how far they might have to cut back, or for how long, if they experience a bad sequence of returns.

Some of his examples track a 40 year retirement, while the 4% guidance was for 30 years. His failure rate is 7% overall for 40 years, while the general 4% concept has a 30 year 5% failure rate. So not that different and 40 vs. 30 years not exactly apples to apples. He likes to use the Cape 10 ratio concept which delves into a different parameter.
Yes the 4% guidance does fail historically 5% of the time. However it has not failed since the mid 60's start retirement year and so far that includes the Year 2000 retiree who has seen 3 bear markets.

 

[Joseph]

Well I guess my little disclosure generated some interest and even a little name-calling, haha. Oh well.

Just to be clear, I currently assume SS will be there when I am ready to claim. But going way way back to when I was a young tyke dreaming of retiring early, I assumed any SS would just be gravy. I did not know how long I would work, but knew I would not have a pension. So personal saving and investing were key. And so it was not in my base planning case until say around 50, when I began to view it as longevity insurance. I still do.

I never suggested anyone make the SS=O assumption currently as that seems too conservative right now.

I also do not currently think SS will take a haircut. I think it will be saved as has happened in the past.

The larger point is if your assumptions are conservative you should have a large margin of safety and less need for retirement calculators (but a spreadsheet is helpful).

 

[Joseph]

Totally get being conservative with SS. Wife warns me to not be too conservative and make sure we do what we want , within reason, now. Always a fine balance but I want to err on the side of caution and be pleasantly surprised

 

[Koolau]

How common is it to rely on calculations that assume Social Security is zero? I suppose it might depend on how far one is from being eligible to claim SS. When I was 30, I was in the camp that doubted whether the SS program as we know it would exist when I reached retirement age. But I'm 61 now. Is there any reason for me to consider excluding SS as an input from these calculators?

Just a thought: I'm not sure if there is an easy way to do it, but maybe you could do some successive approximations in FIRECalc and see HOW MUCH SS would you have to receive to get 100%. Sort of a bassackwards approach to the question, perhaps, but maybe worth a shot.

If it turns out the proposed 23% hit that SS is talking about STILL leaves you enough to reach 100% via FIRECalc, you might be able to rest easier on this subject. I simply do not see SS ever going to "zero." And as stated before, I look for it to be "saved" at the last minute of the last hour. I have no special insight except the phrase "SS is the 3rd rail of politics" comes to mind. YMMV

 

[Koolau]

I'd bet my entire portfolio that SS isn't going away in our lifetimes and then some. I do think it likely to be reduced and a good chance of that in our lifetime (varies with age of course).

I'm looking for "means" testing rather than a "hair cut for all." It's still fashionable to "ask" the "rich" to "pay their 'fair' share." Of course WE (here) are (for the most part) THE rich. Think about the various polls we've had over the years showing that most of us fall between $1MM and $5MM stash. To the "man on the street" that is the very definition of "rich." Heh, heh, get used to it!

 

[Montecfo]

I'm looking for "means" testing rather than a "hair cut for all." It's still fashionable to "ask" the "rich" to "pay their 'fair' share." Of course WE (here) are (for the most part) THE rich. Think about the various polls we've had over the years showing that most of us fall between $1MM and $5MM stash. To the "man on the street" that is the very definition of "rich." Heh, heh, get used to it!

It would be awkward to means test something everyone has been paying into for decades.

I expect the reforms to take the same form as last time: extend full retirement date, increase tax, and perhaps adjust colas. No change in full retirement age for anyone under say 40 or 45.

Pain all around but a workable compromise.

 

[Koolau]

It would be awkward to means test something everyone has been paying into for decades.

I expect the reforms to take the same form as last time: extend full retirement date, increase tax, and perhaps adjust colas. No change in full retirement age for anyone under say 40 or 45.

Pain all around but a workable compromise.

I would just say "it depends." I'll leave it at that as YMMV.

 

[FLSUnFIRE]

I'm looking for "means" testing rather than a "hair cut for all." It's still fashionable to "ask" the "rich" to "pay their 'fair' share." Of course WE (here) are (for the most part) THE rich. Think about the various polls we've had over the years showing that most of us fall between $1MM and $5MM stash. To the "man on the street" that is the very definition of "rich." Heh, heh, get used to it!

That's sort of my view. Of course, if one's wealth is depleted, SS is still insurance as one wouldn't be wealthy anymore. Wealth is hard to define and, especially, find (paintings, overseas assets, etc) and is also somewhat portable (if rich enough) so probably won't be means tested by wealth per se but I could see dividends and cap gains being taxed heavily to get at the rich as most "men on the street" will have very little in the market not in tax advantaged accounts. Once the rules are known, the "rich" can manipulate their assets and "income" appropriately to avoid... they'll always be loopholes for those that pull the strings and fund the polls that sometimes us poor "rich" folks can use. I just don't worry too much about known unknowns and SS for me is BTD/hedge against increasing medical/inflation later in my retirement.

 

[Andre1969]

Agreed. I'm talking about the "finger in the wind" estimate, not a precise calculation. Someone sitting in a cube wondering if they might be able to retire can run the 4% rule on the back of an envelope and either feel a bit better ("hey, I can live on 4% of my savings") or ("I gotta get with the program and save more so I can get outta here ASAP.")

By the way, MOST stories I've seen suggest the 4% rule is TOO conservative. Most people can get away with a higher withdrawal rate - especially if they are willing to cut back during the "down turns." YMMV

According to FireCalc, the 4% rule still gives you an 86% chance of success over 40 years, and 76% over 50. So, even for a longer timeframes, your chance of success is greater than your chance of failure.

Personally, I'd be leery of a 76% chance of success. But I might be able to get talked into something with a 96% chance.

FWIW, if you cut it back to 3.5%, you have a 95% or so chance of your money lasting forever. At least, within the confines of FIRECalc's capabilities.

 

[frank05]

I worry about health breakthroughs utilizing AI in the next ten years that extend life. Can throw a big wrench into any retirement analysis.

 

[ShokWaveRider]

Does anyone here have a sample DOWNLOADABLE Excel Spreadsheet they can share that calculates how much one can withdraw from ones nest egg for a given number of retirement years? NOT one that asks "How Much One Needs every Month", but one that asks Total Nest Egg, Years of Retirement, Anticipated Return (Fixed), Inflation Rate, etc. then returns one can safely withdraw $XXXX per month or/and year. I am compiling a big spreadsheet to consolidate all our fixed income financial assets, and need this in excel format.

I know there are many online one can use, but most if not all do not have downloadable excel equivalents.

Thanks in advance. Something like this but in Excel Format:

Retirement Withdrawal Calculator

Use the retirement withdrawal calculator to find out how long your money will last or how much money you can withdraw in retirement.

www.omnicalculator.com

 

[teej1985]

It would be awkward to means test something everyone has been paying into for decades.

I expect the reforms to take the same form as last time: extend full retirement date, increase tax, and perhaps adjust colas. No change in full retirement age for anyone under say 40 or 45.

Pain all around but a workable compromise.

I'm assuming you meant to say no change in FRA for those OVER age 40 or 45. It would make no sense to grandfather the people who are younger than the cut off while punishing those who are older.

 

[Lorenzo]

Just a thought: I'm not sure if there is an easy way to do it, but maybe you could do some successive approximations in FIRECalc and see HOW MUCH SS would you have to receive to get 100%. Sort of a bassackwards approach to the question, perhaps, but maybe worth a shot.

If it turns out the proposed 23% hit that SS is talking about STILL leaves you enough to reach 100% via FIRECalc, you might be able to rest easier on this subject. I simply do not see SS ever going to "zero." And as stated before, I look for it to be "saved" at the last minute of the last hour. I have no special insight except the phrase "SS is the 3rd rail of politics" comes to mind. YMMV

Yes, that's worth playing with in FIRECalc, but the question is how would I adjust my strategy based on the results? I'm 61, been working reduced hours (or already semi-retired) for years, and I haven't been adding that much to my nest egg (or withdrawing that much, either). I'm not sure "one more year" makes much difference at this point, though I keep at it because it's not awful and it's good for exercising my brain. But I digress. If SS becomes means-tested or my benefit otherwise decreases, I suppose I'll just have to scale back my retirement plans at that time. FWIW, even if I were to assume zero SS, I would have enough for the so-called necessesities. But sitting on the proverbial rocking chair on a porch is not the kind of retirement I have been looking forward to for decades. I have "go-go phase" plans!

 

[Montecfo]

I'm assuming you meant to say no change in FRA for those OVER age 40 or 45. It would make no sense to grandfather the people who are younger than the cut off while punishing those who are older.

Yep

 

[Lewis Clark]

Does anyone here have a sample DOWNLOADABLE Excel Spreadsheet they can share that calculates how much one can withdraw from ones nest egg for a given number of retirement years? NOT one that asks "How Much One Needs every Month", but one that asks Total Nest Egg, Years of Retirement, Anticipated Return (Fixed), Inflation Rate, etc. then returns one can safely withdraw $XXXX per month or/and year. I am compiling a big spreadsheet to consolidate all our fixed income financial assets, and need this in excel format.

I know there are many online one can use, but most if not all do not have downloadable excel equivalents.

Thanks in advance. Something like this but in Excel Format:

Retirement Withdrawal Calculator

Use the retirement withdrawal calculator to find out how long your money will last or how much money you can withdraw in retirement.

www.omnicalculator.com

Not downloadable, but here is a link to a Google Sheet:

An Updated Google Sheet DIY Withdrawal Rate Toolbox (SWR Series Part 28) - Early Retirement Now

Since I first published Part 7 of the SWR Series with the accompanying Google Sheet in early 2017, I’ve made several changes and enhancements. Sometimes without much explanation or documentation. So, it would be nice to do a quick update and itemize the changes since then. Whether this is the...

earlyretirementnow.com

 

[ShokWaveRider]

Not downloadable, but here is a link to a Google Sheet:

An Updated Google Sheet DIY Withdrawal Rate Toolbox (SWR Series Part 28) - Early Retirement Now

Since I first published Part 7 of the SWR Series with the accompanying Google Sheet in early 2017, I’ve made several changes and enhancements. Sometimes without much explanation or documentation. So, it would be nice to do a quick update and itemize the changes since then. Whether this is the...

earlyretirementnow.com

Thanks but it is not what I was looking for. There is a lot of info there that is not relevant to our scenario. I need something I can import into Excel and edit. But thank you anyway.

 

[oldtimer]

Thanks but it is not what I was looking for. There is a lot of info there that is not relevant to our scenario. I need something I can import into Excel and edit. But thank you anyway.

You can download it as an Excel file.

 

[temartin]

I can also recommend Pralana. This retirement calculator used to be distributed as an Excel app but they are now in the process of reimplementing it as a web based app. It costs about $109 per year and is well worth the cost. When I ran into problems, the author of the tool was kind enough to give me guidance.

Third rec for Pralana. I use all the free calculators as reasonableness checks against each other, but for paid calculators, have settled on Pralana Gold. You can get pretty granular on what's in each type of account (Taxable, Tax deferred, Roth) and it can help you decide which order to withdraw based on taxes.

 

[meleana]

I used a couple, but when it came down to it it was our fee only financial advisor who told us that we could retire and how.