Retirement Calculators

 Gotta admit, about five years ago I had a 'concern'.  Many of my close buddies have pensions. Many will be 'double dipping' with military retirements and current employer retirements.  But, not all. Definitely not myself.  I've been playing with these calculators for many years, but really began focusing on them just a few years ago.  As of late, Fidelity has a good one as does the holder of my current 401k.  And I've got a few spreadsheet variants that I use.   JP Morgan has some cool stuff they've provided me; full blown printed out overviews.  Put them all together and you get a solid feel for the direction one is headed.

 

Had a discussion with my sis n' law this morning on the subject and that's what prompted all this.  Her hubby retired last year. She wants to pull the plug this year.  I think she's coming up on 65, he around 63.  Basically, they have about 4 years on me.   I've been planning on pulling the plug at approximately 65 though I've often joked that as long as the paycheck continues to show up, why walk away from it?  I've deep down thought I could do it now.. but...  as I've said, as long as the paycheck rolls in every two weeks why change a good thing?  Bottom line is she asked me straight up if I could do it 'now.  My answer was 'yes' .. but...to be honest .... I'd never truly run the numbers.  I've done them a thousand times in my head but for whatever reason.... but never put them to the test.  So, today I did.

So many things go into the formula.  Military Retirement. Social Security benefits. IRAs and 401ks.  Overall savings and investments.  Until today, I never put 'long term care' into the formula.  Also, I'd normally assumed by 80 I'd kick the bucket and my spouse by 85.  Never worried about those ages since the numbers always 'worked out' way past that.  But today...  I crunched them a half dozen  ways.  Below, I show 3 of them at various retirement ages.  At the very end, one final play with the numbers assuming we make it to 100 years above ground.

 

This has been my main set of results I've used for a few years.  I pull the plug at 65, keep my annual costs in check and ...   when we get to the 'end', we haven't burned through it all.  I've played with the numbers a lil and bumped up my annual costs, but I theoretically can burn through it all a few years early.  So I keep the annual costs lower, essentially my future monthly pay, in a realistic realm.   I've been all warm and fuzzy with the results.  What these don't show is the start/stop numbers at the top right which I covered up for obvious reasons.  In each scenario, the a$$ets left at the end of plan, are substantial except for my fourth and final calculation at the end of this. What that means is one could up their annual spending 10-20% and possibly still make it through to the 'end' okay.

 

 

 

 Well, my sis n' law asked about 'now.' This year.  So, assuming I punched out of the rat race this late summer, as one can see.. the numbers work!  This is the one that really counts I guess, saying ... Get Out!  Be Done!  Retire!  But, I'd rather work longer, invest more, and have a higher annual 'salary' potentially.  And as I've said before...  I'm not really ready to pull the plug yet... but for some reason I continue to toy with the idea.  I need to stop the madness and quit torturing myself.  Keep the head down, enjoy life, enjoy the job and ...  stop playing with these numbers?

 

 

Now this was something new I implemented. Threw in the variable of 'long term care' for both of us, and picked a retirement date of 2.5 years from now.  Now 'score' drops to 108, but still in the green and I don't burn through my IRAs and 401k. Got to admit, this one gave me a warm fuzzy.  There are so many variables we don't take into account.  Our health, future taxes, inflation, you name it.  Luckily the algorithms used to create these charts do for the most part.  

The above are all used with the lowest performing option so I don't over estimate (Significantly Below Average Market).  When I pick the other two options, numbers look awesome and I could fund my ass into the next century. I've seen the Sci-Fi movies ....   it could happen!?

Significantly Below Average Market

A significantly below average market is defined as the 90% confidence level of estimated future balances and/or estimated future income. The 90% confidence level represents significantly below average market conditions with 10% of all hypothetical scenarios tested performing worse. This means that in 90 out of 100 market scenarios tested a hypothetical portfolio similar to yours performed at least as well as the results shown and 10 out of 100 performed worse than the results shown.

Below Average Market

A below average market is defined as the 75% confidence level of estimated future balances and/or estimated future income. The 75% confidence level represents below average market conditions with 25% of all hypothetical scenarios tested performing worse. This means that in 75 out of 100 market scenarios tested a hypothetical portfolio similar to yours performed at least as well as the results shown and 25 out of 100 performed worse than the results shown.

Average Market

An average market is defined as the 50% confidence level of estimated future balances and/or estimated future income. The 50% confidence level represents average market conditions with 50% of all hypothetical scenarios tested performing worse. This means that in 50 out of 100 market scenarios tested a hypothetical portfolio similar to yours performed at least as well as the results shown and 50 out of 100 performed worse than the results shown

So, I'm getting 'closer' to the final goal line (retirement).  Assuming the market doesn't 'implode',  all good. But even then, I've got this in 5+ different 'pots' to ensure a single one doesn't bring it all down. A friend of mine gave me a view into his world from the early 2000s where he got mauled in the stock market and never recovered.  I personally believe if he'd had cash assets available he could of rode out the entire mess and came back from it, but if you've got the majority of your funds tied up in the market and you have to sell to survive the next 3-12 months, you lost the opportunity for them to recover.  Moral of the story; have access to cash/funds for a year. Hell, have enough to go on a buying spree at fire sale prices, if the market plummets again?  What if the market does implode?  Well, there's always Gold, Silver and Lead (backed by gunpowder)?

As I finish this , I went back to the Fidelity Retirement Calculator one last time.  Bumped up my monthly spending.  Assumed we both make it to 100. Kept creeping up the monthly numbers until, we run out of funds in 2066.  I guess at that point, you're eating oatmeal and could live off any social security crumbs, assuming it's still intact? But, if one believes all these calculations.... I'll be able to afford a bottle of JD when I get there.  So many variables not taken into account .. can't take into account .. but .. hey .. gotta' have a plan.  You know what this doesn't take into account?  As we get older, we may spend a lot less annually ......   damned it .. how do I put that into the calculator? Option doesn't exist. Hmmmm...  time to check on them spreadsheet based ones I guess.

 

Hey .. could happen :)