Bears Retired

Bears Retired

Retirement Calculator - Know What You'll Need for a Comfortable Retirement

 

1. how much you are required to save (usually per month) to enable yourself to retire or 
2. how large of a retirement pot you need in order to retire

The retirement calculator does these computations by accounting for the retirement savings you already have:

* savings in a retirement plan such as company retirement plan or IRA 
* monthly income you will receive from a pension or from social security or retirement deferred comp plan 
* non-retirement assets that you have: stocks, bonds, mutual funds, notes, etc 
* equity in your house that you may have available should you desire to trade down and free up equity for investing or take a reverse mortgage

The retirement calculator also computes the age at which you want to retire and your forecasted life expectancy. While it may seem like the largest factor is the financial resources you bring into your retirement that will bear on your retirement comfort, it is in reality not these financial facets. The biggest factors of your retirement success are your retirement age and the quantity of years you experience in retirement. Therefore, when applying a retirement calculator, we suggest you run the scenario several times using several life expectancy estimations and also see what happens when you alter your retirement age from say age 64 to age 66. You may be shocked at the difference you see.

The most superior retirement calculators are commonly not those encountered on-line. The most useful calculators are software that you pay for (not very expensive) as they permit for much more advanced results. For example, while the free online retirement calculator will give you a forecast of the amount you need to save up or the nest egg you need to meet your retirement income objectives, the purchased retirement calculators often use Monte Carlo simulations to account for a variety of future outcomes. Unlike the free online retirement calculator that offers ONE average outcome, Monte Carlo simulations illustrate a range of possible outcomes with their probabilities. You can hence experience the chance of a specific scenario happening.

Be aware that any retirement calculator has weaknesses because it must rely on presumptions such as:

1. Anticipated yearly returns for the asset types you select (e.g. stocks, bonds, etc). Some retirement calculators ask you for these approximations while others have built-in assumptions. Either way, if the assumption is that stocks generate a 10% return over the next 30 years and they generate an 8% return, your retirement years may not go as projected.

2. Forecasts about asset class volatility and correlations with other classes may not be as forecasted. For example, even if stocks are assumed to generate 10% annual returns over your retirement and they do, if the stocks lose eight percent for each of the starting three years of your retirement, your retirement financial objectives will still not be attained because the order of returns has a important impact on your retirement calculations.

3. No individual knows what retirement income tax rates we will experience. When you make your assumptions, it is best to assume that rates will be higher in the future (how else can the US government close the deficit)?

4. No person knows what the inflation rate we will have. Closely connected to this is the economic value of the US dollar and most retirement calculators do not account for that. If you desire to travel outside the US in retirement and the US dollar is worth 20% less, then it means your travel costs abroad will cost you 25% more. The value of the US dollar plus the impact of domestic inflation are two other unknowns that a retirement calculator may not account for or may need to depend on estimations that prove wrong.

Before you come to the decision that utilizing a retirement calculator is a waste of time, we encourage you to reconsider. By experiencing the exercise and thinking about the elements and seeing how the individual retirement variables interact, any such exercise will give you a much better sense of realism for your retirement objectives.

To learn all the aspects of winning a comfortable retirement, visit Bob's blog Retirement Age

 

About the Author

What information (ammunition) can I use to fight our community because they want to outlaw bird feeders?

The private community I live in wants to outlaw feeders because they attract bears and turkeys. I need ammunition to help fight this!
We have one tiny feeder on our kitchen window that is one of the joys of our retired life here in the woods. Anybody got some good info or links out there?

As a school board member I would consider using the educational aspect of having birds attracted to your area. Plus they are needed to keep the balance of nature even and today the "Go Green" slogan is what is the wave of helping to save our planet. If larger animals are the reason they need to address other means to detour them such as a feeding site in a different direction from your community. Is this a sr. community, retirement area or general populace that live there?

Bears On The Coast Episode 9 (Part 1): Happy Valentine's Dick & Retired Alligators