Author Topic: CNN Money retirement calculator... :)  (Read 10728 times)

Tennis Maniac

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CNN Money retirement calculator... :)
« on: November 13, 2013, 08:14:55 AM »
I just read an article on CNN about a couple that saved $2,000,000 for retirement.  Yay!

Then I clicked an embedded link for "related: will you have enough to retire?" and stumbled upon this:

   http://money.cnn.com/calculator/retirement/retirement-need/

So I tried to enter my information and was unable to enter a retirement age below 50 or a savings rate above 25%.  Also, adjusting the savings rate had no effect on the "You will need" amount.  (Methodology: "We then assume you can live comfortably off of 85% of your pre-retirement income. So if you earn $100,000 the year you retire, we estimate you will need $85,000 during the first year of retirement."  HA!)

I realize that these type of retirement calculators aren't meant for me, but it is truly sad that a retirement calculator on one of the most visited sites on the internet leads people to believe that they should save 15% of their salary for 40 years and it is okay to live on 85% of your salary!

Thank God I found the MMM site to help me decelerate my spending and accelerate my savings.

Roland of Gilead

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Re: CNN Money retirement calculator... :)
« Reply #1 on: November 13, 2013, 08:44:54 AM »
It is a lot better than they figure if you really need don't need $85,000.
Assume you only need $35,000 as a married couple.

Not only is this $50,000 less, but you will pay near zero taxes and get a hefty ACA subsidy.  That means the $35,000 is really quite closer to the $85,000 income than you might guess.

At $85,000 you might expect to pay at least $5,000 in federal/state taxes and forego $8,000 in ACA subsidy and premium assistance.  Thus you have really $72,000 to live on where the other couple has the full $35,000.

They only need about $1,200,000 in their portfolio and the $85,000 a year person needs near $3,000,000

mpbaker22

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Re: CNN Money retirement calculator... :)
« Reply #2 on: November 13, 2013, 10:28:22 AM »
I just read an article on CNN about a couple that saved $2,000,000 for retirement.  Yay!

Then I clicked an embedded link for "related: will you have enough to retire?" and stumbled upon this:

   http://money.cnn.com/calculator/retirement/retirement-need/

So I tried to enter my information and was unable to enter a retirement age below 50 or a savings rate above 25%.  Also, adjusting the savings rate had no effect on the "You will need" amount.  (Methodology: "We then assume you can live comfortably off of 85% of your pre-retirement income. So if you earn $100,000 the year you retire, we estimate you will need $85,000 during the first year of retirement."  HA!)

I realize that these type of retirement calculators aren't meant for me, but it is truly sad that a retirement calculator on one of the most visited sites on the internet leads people to believe that they should save 15% of their salary for 40 years and it is okay to live on 85% of your salary!

Thank God I found the MMM site to help me decelerate my spending and accelerate my savings.

Most calculators are like that.  The one we have at work is better though.  I have my retirement age set at 45, and I said I need $20,000 per year.  It did warn me that $20,000/year might not be enough, but it didn't force me to change.  It did suggest I switch more towards bonds, though ...

Tennis Maniac

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Re: CNN Money retirement calculator... :)
« Reply #3 on: November 13, 2013, 10:06:46 PM »
I have my own "FI calculator" so I don't rely on CNNMoney.
My favorite part of this calculator (and probably) most others is that savings rate has no bearing on how much money is needed to retire. Aren't salary and savings rate the two variables needed to calculate how much money I need to retire.  No... Apparently the variables are salary and retirement age; and then throw in some assumptions like retirement spending will be 85% of working salary and you will live until 92 years old.  Really, what a waste of a programmer's time.

The hardest part of retirement planning is understanding your spending.  People don't have the patience to keep track of their spending, so CNNMoney has to create a calculator that caters to the instant gratification needs of most people.  Sad.

JessieImproved

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Re: CNN Money retirement calculator... :)
« Reply #4 on: November 19, 2013, 06:41:40 PM »
The hardest part of retirement planning is understanding your spending.  People don't have the patience to keep track of their spending, so CNNMoney has to create a calculator that caters to the instant gratification needs of most people.  Sad.

Mint has literally saved my @$$ on that one.

Abe

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Re: CNN Money retirement calculator... :)
« Reply #5 on: November 19, 2013, 07:00:34 PM »
One of those calculators spurred me to research retirement savings, and led me to this website... so it's not all bad!  Hopefully some fraction of people will be like "wow! that's quite an arbitrary assumption" and look for other solutions.

Undecided

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Re: CNN Money retirement calculator... :)
« Reply #6 on: November 19, 2013, 07:30:55 PM »
I just read an article on CNN about a couple that saved $2,000,000 for retirement.  Yay!

Then I clicked an embedded link for "related: will you have enough to retire?" and stumbled upon this:

   http://money.cnn.com/calculator/retirement/retirement-need/

So I tried to enter my information and was unable to enter a retirement age below 50 or a savings rate above 25%.  Also, adjusting the savings rate had no effect on the "You will need" amount.  (Methodology: "We then assume you can live comfortably off of 85% of your pre-retirement income. So if you earn $100,000 the year you retire, we estimate you will need $85,000 during the first year of retirement."  HA!)

It's sort of fascinating that it will let you say that you save 25% of your salary, but it will still assume you'll need 85% of your salary to spend. If I could just get that extra annual 10% they've created, I could retire today!
« Last Edit: December 05, 2013, 08:21:50 AM by Undecided »

ToughMother

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Re: CNN Money retirement calculator... :)
« Reply #7 on: December 05, 2013, 04:42:52 AM »
I just saw that article today and noticed the 25% max savings rate!  Face punch to CNN for having an article about the perils of poor retirement planning but not allowing folks to explore higher savings rates!

oldtoyota

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Re: CNN Money retirement calculator... :)
« Reply #8 on: December 09, 2013, 07:41:13 PM »
It is a lot better than they figure if you really need don't need $85,000.
Assume you only need $35,000 as a married couple.

Not only is this $50,000 less, but you will pay near zero taxes and get a hefty ACA subsidy.  That means the $35,000 is really quite closer to the $85,000 income than you might guess.

At $85,000 you might expect to pay at least $5,000 in federal/state taxes and forego $8,000 in ACA subsidy and premium assistance.  Thus you have really $72,000 to live on where the other couple has the full $35,000.

They only need about $1,200,000 in their portfolio and the $85,000 a year person needs near $3,000,000

This is great.

oldtoyota

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Re: CNN Money retirement calculator... :)
« Reply #9 on: December 09, 2013, 07:42:45 PM »
One of those calculators spurred me to research retirement savings, and led me to this website... so it's not all bad!  Hopefully some fraction of people will be like "wow! that's quite an arbitrary assumption" and look for other solutions.

That is wonderful!

Those calcs led me astray for a good long time. I thought I'd never have enough. Then, thankfully, MMM was interviewed in the Wash Post. Now, here I am with a plan and with the knowledge that I'll make it one day!

Rich M

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Re: CNN Money retirement calculator... :)
« Reply #10 on: December 10, 2013, 10:23:33 PM »
I have posted similar stuff on this before.  CNN posts the worst garbage on money related stuff.

And don't sign up for their investment tool.  It's there to get info....hey don't sign up for any of them.  They are there to give you some calculations you can do yourself but they get your personal information.


seattlecyclone

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Re: CNN Money retirement calculator... :)
« Reply #11 on: December 12, 2013, 01:43:50 PM »
Fidelity's calculator is even worse than CNN's. It doesn't let you specify a retirement age earlier than 62, a savings rate higher than 15%, or retirement expenses below 80% of your salary. I would expect Fidelity, or any other firm that offers high-fee mutual funds, would see it in their best interest to encourage people to put as much money with their firm as possible. Implying that nobody could or should save more than 15% of their income would seem to be counterproductive to that goal.

Lian

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Re: CNN Money retirement calculator... :)
« Reply #12 on: December 26, 2013, 01:30:31 AM »
I've found it frustrating that the assumptions of retirement calculators I've tried weren't justified or defined. The retirement expenses of 85% or so of pre-retirement income make no sense for many people - if you retire with your mortgage paid off and are no longer saving for retirement, expenses should go down more than 15%.  They also assume that you should never touch the principal.

MSN Money has an easy to use calculator that allows you to change all variables. You can enter any retirement age, savings rate, and income replacement at retirement.  I'm saving & investing about 1/2 my income, so using conservative numbers entered in the calculators investment return, I am confident I can retire (from my wage-slave job, not necessarily from working) in a couple of years and sustain a decent, if frugal, life with enough left at the end for elder care.  Financial planners use one set of assumptions designed for a small, wealthy segment of the population that expect to live well and preserve their principal in retirement, and apply it to everyone.

galaxie

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Re: CNN Money retirement calculator... :)
« Reply #13 on: December 27, 2013, 05:52:49 PM »
CNN Money actually had a pretty decent calculator before they put up all the crappy ones.  Here's the link:

http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner_101.jsp

I've used it a few times - it requires you to know more about your savings and income, which is probably why they put up the uselessly basic ones they have now.