Author Topic: retirement calculators questions  (Read 3013 times)

partgypsy

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retirement calculators questions
« on: March 12, 2015, 09:40:21 AM »
Hello, I have done these retirement calculators before and realize I'm not sure if I am using them correctly.
I am not aiming for early retirement but retirement at 62, when ss kicks in.

For example there is one available through my workplace (gov via tsp) and here are some questions...

a) it asks you to enter expected return,  anywhere from 0=?% I've been putting in 5 or 6 %, given that I have a 65/35 stock/bond mix. However, I don't know if they are referring to total return, or net/adjusted after inflation return. That would make a difference. What are people putting in for this? And what is a reasonable expectation given that some say returns on average will be lower in the future? 

b) Social security estimates real dollar or will be inflation adjusted. Then enter the expected social security amount one would expect. I have looked up on soc sec and enter that number. Now is that number the actual number amount, or will it be inflation adjusted (larger) when receiving it?

c) inflation adjustment future expenses. Once I do that, I compare that to my current living expenses, and what percent it would cover my living expenses. However, while I do agree with MMM that some aspects of inflation can be controlled by how much and what spend on, there will be others that will not (property taxes, other sales taxes, also food, base prices in general) so I think that I should calculate some inflation adjustment for 15 years in the future, but not sure how to do this.   

MDM

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Re: retirement calculators questions
« Reply #1 on: March 12, 2015, 10:47:42 AM »
a) Using "real" returns (~actual minus inflation) is usually easiest, in conjunction with...
b) Entering the numbers you get from the SS web site.  They are in today's dollars and the amount you receive will be larger by whatever inflation occurs between now and then.
c) Entering expenses in today's dollars.  Because you did not allow for inflation on the income side (a & b above), you should not add it on the expense side.

Eric

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Re: retirement calculators questions
« Reply #2 on: March 12, 2015, 10:55:48 AM »
You really shouldn't use any calculator that asks for an expected return.  At least not while www.cFIREsim.com is available.

partgypsy

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Re: retirement calculators questions
« Reply #3 on: March 12, 2015, 02:17:46 PM »
That makes sense, just enter numbers "as is".

I will try out fire calc, but didn't know if it would apply to me as by the time I retire the assumption is I will have both a pension and SS.

arebelspy

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Re: retirement calculators questions
« Reply #4 on: March 12, 2015, 02:53:52 PM »
That makes sense, just enter numbers "as is".

I will try out fire calc, but didn't know if it would apply to me as by the time I retire the assumption is I will have both a pension and SS.

There is only assumptions that you input.
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partgypsy

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Re: retirement calculators questions
« Reply #5 on: March 12, 2015, 03:03:31 PM »
I guess I don't yet trust these numbers they seem so optimistic. When doing them I get either 100% or 95% success rate, even when change the numbers to say retire 3 years earlier than expected (62). It is true with my current plan, I will have pension plus ss plus 4% withdrawal rate be about 120% of my current spending if retire at 62 (assuming have same or similar job making the same, non interrupted employment, no catastrophes etc). i guess for me, since I am far out from retirement, this is all more hypothetical and prone to change compared to someone say 5 years from retirement.
As additional cushion also not adjusting downward our spending, even though at that point our house will be paid off and kids out of house.
What percent success do people shoot for 100% or 95% or depends on pple's risk?   
« Last Edit: March 12, 2015, 03:06:32 PM by partgypsy »

arebelspy

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Re: retirement calculators questions
« Reply #6 on: March 12, 2015, 03:25:25 PM »
I guess I don't yet trust these numbers they seem so optimistic. When doing them I get either 100% or 95% success rate, even when change the numbers to say retire 3 years earlier than expected (62). It is true with my current plan, I will have pension plus ss plus 4% withdrawal rate be about 120% of my current spending if retire at 62 (assuming have same or similar job making the same, non interrupted employment, no catastrophes etc). i guess for me, since I am far out from retirement, this is all more hypothetical and prone to change compared to someone say 5 years from retirement.
As additional cushion also not adjusting downward our spending, even though at that point our house will be paid off and kids out of house.
What percent success do people shoot for 100% or 95% or depends on pple's risk?

It depends on the person, but I will tell you that if you can make it to the secret ultra-safe WR, you can get above 100% success rate.  The choice is yours.  Good luck!
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

skyrefuge

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Re: retirement calculators questions
« Reply #7 on: March 12, 2015, 03:58:54 PM »
I guess I don't yet trust these numbers they seem so optimistic.

That's why most people here, upon seeing similar numbers, quickly realize "why the fuck would I work 'til 65?!"

I'd have something like $12M in the bank if I worked that long, and it would go unused since Social Security would cover all my needs.