The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: clairebonk on May 02, 2022, 09:44:27 PM
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Most retirement calculators have only one option for retirement annual spending. I’d like to retire early, but I will need more over the next 15 years until my mortgage is paid off. Then I will need much less because I live in HCOL. Any tips on how to calculate my magic number based on this? I assume this is not a unique problem. The formula I am using is magic number = annual spending * 25.
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CFIRESIM is the tool you want. You can model mortgage payoff as well as other one-time expenses in that tool.
It is the best retirement calculator out there.
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...I will need more over the next 15 years until my mortgage is paid off.
The formula I am using is magic number = annual spending * 25.
If you compare "magic number" to "invested assets minus remaining mortgage balance," and omit mortgage payments from "annual spending," that should be about as accurate as the "4% rule (https://www.bogleheads.org/wiki/Safe_withdrawal_rates)."
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CFIRESIM is the tool you want. You can model mortgage payoff as well as other one-time expenses in that tool.
It is the best retirement calculator out there.
Apologies for piggybacking on this thread but as far as I can tell, CFIRESIM has a rather simple view of what constitutes a portfolio - it does not distinguish between taxable and tax-advantaged assets and cannot handle taxes.
It appears that only sophisticated tools like Pralana Gold have the ability to handle realistic portfolios and taxes. As a Fidelity customer, I have used their modeling tools and it is pretty good but I am always on the lookout for alternatives.
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For what its worth, I gave the Bogleheads Retiree Portfolio Model (https://www.bogleheads.org/forum/viewtopic.php?t=97352) a try and I was pleasantly surprised with how comprehensive it is. If you have Microsoft Excel, this calculator is worth trying as it makes use of much finer grained data about your finances.
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Hahaha, any time you want to talk about mortgage payoff, you know where to find me...
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I tried CFIRESIM, and read about Pralana Gold and Retiree Portfolio Model. They are all really detailed and comprehensive. Thanks for the recommendations!
MDM, I was hoping it wasn't that simple because I don't love that number! :wink
Dicey, you told me that you regret *not* having a mortgage!
We have 3 houses which will all be paid off in 15 years. So, why not retire now, burn through my retirement stash, then live off of rental income? Do you know of anyone who has done that? I can make my retirement stash last 15 years. I need to start the ladder now though?
It's just that.... I finally am making good money and my job is *not* stressful and I like it. I think part of why I like it is because I feel I don't *have* to do it so I don't kill myself.
Thanks for listening. The MMM community has changed my life trajectory and I wouldn't be as happy as I am now without the community guidance.
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I tried CFIRESIM, and read about Pralana Gold and Retiree Portfolio Model. They are all really detailed and comprehensive. Thanks for the recommendations!
MDM, I was hoping it wasn't that simple because I don't love that number! :wink
Dicey, you told me that you regret *not* having a mortgage!
We have 3 houses which will all be paid off in 15 years. So, why not retire now, burn through my retirement stash, then live off of rental income? Do you know of anyone who has done that? I can make my retirement stash last 15 years. I need to start the ladder now though?
It's just that.... I finally am making good money and my job is *not* stressful and I like it. I think part of why I like it is because I feel I don't *have* to do it so I don't kill myself.
Thanks for listening. The MMM community has changed my life trajectory and I wouldn't be as happy as I am now without the community guidance.
Since I posted the reply above, I went ahead and bought a copy of Pralana Gold. It may be relevant for your needs since it has a whole section devoted to modeling the finances of rental properties. But be warned that it is a complex modeling tool to use and takes a fair bit of careful study of the manual. But the creator of the tool is very good at answering questions. Also, the tool runs only on Excel and costs over $100 - but I think its worth the money.