Author Topic: Even Vanguard doesn't understand us!  (Read 5948 times)

FireLane

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Even Vanguard doesn't understand us!
« on: July 17, 2015, 06:54:36 PM »
Vanguard's personal investors site has a retirement calculator:

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

Very helpful, right?

Trouble is, as I found from playing around with the sliders, it's not well suited for people planning on FIRE. It doesn't let you specify that you plan to retire any earlier than 50. It doesn't let you say that you save more than $60,000 a year, no matter how much you make. (I'm sure some badass Mustachians can beat that number.) And it doesn't let you specify that you plan on needing less than 60% of your current income - income, not spending - in retirement.

You'd think that with the number of FIRE folks who treat Vanguard as our savior, they'd design a site that gets us better!

fb132

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Re: Even Vanguard doesn't understand us!
« Reply #1 on: July 17, 2015, 07:24:49 PM »
Does it really matter about Vanguard's calculator?

MgoSam

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Re: Even Vanguard doesn't understand us!
« Reply #2 on: July 17, 2015, 08:02:22 PM »
Vanguard is a good investment tool. It is geared towards the vast majority of people finding it easy to use. It isn't really geared towards us that want to retire early. Instead, we must choose our own funds to invest in and handle our own retirement.

aperture

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Re: Even Vanguard doesn't understand us!
« Reply #3 on: July 17, 2015, 09:21:08 PM »
Does it really matter about Vanguard's calculator?
i would say that Vanguard's calculator really matters. It is not easy for most of us to always recognize the assumptions underlying our model of reality. The calculator reinforces a model of reality that is built on over-consumption, fear and excess. By limiting the sliders, investors trying to learn have blinders put on them by the advisors they have trusted.

zephyr911

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Re: Even Vanguard doesn't understand us!
« Reply #4 on: July 17, 2015, 10:14:18 PM »
Vanguard's personal investors site has a retirement calculator:

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

Very helpful, right?

Trouble is, as I found from playing around with the sliders, it's not well suited for people planning on FIRE. It doesn't let you specify that you plan to retire any earlier than 50. It doesn't let you say that you save more than $60,000 a year, no matter how much you make. (I'm sure some badass Mustachians can beat that number.) And it doesn't let you specify that you plan on needing less than 60% of your current income - income, not spending - in retirement.

You'd think that with the number of FIRE folks who treat Vanguard as our savior, they'd design a site that gets us better!
Why would they bother to limit the amount? I'm no badass and I'm almost there.

Taran Wanderer

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Re: Even Vanguard doesn't understand us!
« Reply #5 on: July 17, 2015, 10:36:47 PM »
Why would they bother to limit the amount? I'm no badass and I'm almost there.

Seriously. If you're going to the trouble of building a calculator, why not give it total flexibility?

fb132

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Re: Even Vanguard doesn't understand us!
« Reply #6 on: July 18, 2015, 06:33:30 AM »
I prefer the MMM calculator, it's more simpler.

FireLane

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Re: Even Vanguard doesn't understand us!
« Reply #7 on: July 18, 2015, 09:21:16 AM »
Does it really matter about Vanguard's calculator?
i would say that Vanguard's calculator really matters. It is not easy for most of us to always recognize the assumptions underlying our model of reality. The calculator reinforces a model of reality that is built on over-consumption, fear and excess.

Yeah, I agree with that. It's not as if we need Vanguard's permission to be able to retire, but the way the calculator works, it reinforces traditional notions of what retirement means and how you can be able to do that. I don't think it's even the programmer's fault, necessarily. They were probably following assumptions they didn't even realize they were making.

Digital Dogma

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Re: Even Vanguard doesn't understand us!
« Reply #8 on: July 18, 2015, 12:22:48 PM »
Vanguards entire business strategy is based around attracting long-term investors with low cost services. The low cost inevitably means that they rely on people staying with them for a very long time in order to turn a reasonable profit per customer.
Suggesting to the average investor who may have started an IRA and has a 401k that they can FIRE before age 50 would likely be confusing and alarming to the average person who doesn't save more than 10-15% of their take home pay.
Its in Vanguards best interest to attract a customer with the mindset that they will be working for the next 20-30 years slowly and steadily reaching their retirement goal while riding out market fluctuations. Sure you can tell everyone you'll FIRE in 10 years, but if the next 'great recession' hits a decade from now you'll probably have to change course or plan on living way beneath the means you originally desired. People generally are not intuitive when it comes to the economy, and while the average MMM reader would go "duh" to all of this, it may well go right over the average Vanguard customer's head. Why confuse a potential customer with contradictory information (IE: You can retire in 10 years if you want, but we would prefer if you do it slow and steady for the next 20-30 years for 'best results').

nobodyspecial

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Re: Even Vanguard doesn't understand us!
« Reply #9 on: July 18, 2015, 01:21:57 PM »
Or more likely - the intern that cobbled together the code for the calculator copied it from another site.

RWD

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Re: Even Vanguard doesn't understand us!
« Reply #10 on: July 18, 2015, 02:31:35 PM »
It doesn't let you say that you save more than $60,000 a year, no matter how much you make. (I'm sure some badass Mustachians can beat that number.)

We could break that number this year. And we should almost certainly break that next year.

forummm

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Re: Even Vanguard doesn't understand us!
« Reply #11 on: July 18, 2015, 03:58:45 PM »
I don't think it really has much to do with Vanguard's business strategy. I think it's just the same old paradigm paralysis that almost every retirement-oriented resource or news article seems to have. No mainstream resource even dreams of saying you could retire before 50. It's just unheard of. The people creating the site probably thought it would be silly to include. And maybe they had to put some limits on it to make the sliders and their behind the scenes assumptions work out OK.

It does let you save over 100% of your income if you have an income below $60k--so that's nice flexibility there :)

Zamboni

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Re: Even Vanguard doesn't understand us!
« Reply #12 on: July 18, 2015, 04:28:43 PM »
The reason that I like the calculator linked in the MMM article much more than the Vanguard calculator (and most other online retirement calculators) is that it comes from an opposite perspective

Most retirement calcs: ask you to input the age you want to retire and some financial information and then tell you if you are "on track" or not. As pointed out, many of these have silly arbitrary limits and assumptions which make it difficult to even model my true situation.

The one at networthify linked by MMM has you put in your current savings and living expense numbers and tells you how many more years you need to work. For me, that is a much better way to look at it. It could be made more complex, of course, but the simple inputs seem to cover most bases.

Between the one at networthify and firecalc, the bases for retiring early and safely seem pretty well covered.

forummm

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Re: Even Vanguard doesn't understand us!
« Reply #13 on: July 18, 2015, 05:01:20 PM »
Between the one at networthify and firecalc, the bases for retiring early and safely seem pretty well covered.

And cFIREsim.

MDM

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Re: Even Vanguard doesn't understand us!
« Reply #14 on: July 18, 2015, 10:46:53 PM »
Between the one at networthify and firecalc, the bases for retiring early and safely seem pretty well covered.

And cFIREsim.

www.i-orp.com provides its own perspective, somewhat different from most.  Sometimes different is good.

Jack

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Re: Even Vanguard doesn't understand us!
« Reply #15 on: July 19, 2015, 06:36:08 AM »
Vanguards entire business strategy is based around attracting long-term investors with low cost services. The low cost inevitably means that they rely on people staying with them for a very long time in order to turn a reasonable profit per customer.

Sure, but Mustachians stay with Vanguard long-term, too -- it's just that we spend less time in the accumulation phase and more time in the drawdown phase. It's not as if we're switching to all-cash and closing our accounts when we hit FIRE, you know!

Suggesting to the average investor who may have started an IRA and has a 401k that they can FIRE before age 50 would likely be confusing and alarming to the average person who doesn't save more than 10-15% of their take home pay.

I think you've hit on it here: the folks at Vanguard are (cynically) deciding not to show people the possibility of FIRE, because they know most people won't be capable of living up to those assumptions.

forummm

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Re: Even Vanguard doesn't understand us!
« Reply #16 on: July 19, 2015, 10:39:55 AM »
Between the one at networthify and firecalc, the bases for retiring early and safely seem pretty well covered.

And cFIREsim.

www.i-orp.com provides its own perspective, somewhat different from most.  Sometimes different is good.

I hadn't seen that one.

Note: "Retirement ages must be 37 or greater".

Cougar

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Re: Even Vanguard doesn't understand us!
« Reply #17 on: July 19, 2015, 12:27:23 PM »