When Can You Retire? |
17 Comments |
Have you ever sat down and figured out when you might be able to successfully retire? If you have you might have realized that the closer you are retirement the better your estimation are. Since I’m only 31, calculating my retirement is is like trying to sink a putt from far, far away. There are just too many variables between me and the goal.
For this reason, I have largely refrained from retirement projections. It seemed futile to me. Everything has changed since a reader passed on a tip. I feel like Tiger Woods with a top of the line putter now. The tip? Check out this great retirement calculator. I’ve seen retirement calculators before, but FireCalc seems to be to take every factor into account.
I put it through the tests and at my current savings rate, it says I should be to retire in 16 years at age 47. If that seems early to you, it should. I ran my calculations assuming that I’d continue to max out my Roth IRA and 401Ks. This may not be possible if new priorities come into my life. For instance, if me and Energy Gal decide to have children and/or buy a bigger home, I might have difficulty carrying through with my plan.
If you have a couple of minutes, give the calculator a run. Let me know in the comments what you think of the results.
This post deals with: ... and focuses on:Retirement
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June 20th, 2007 at 7:23 am
Looks like a good one. A student tried to do the same thing with Excel and it took him 2 months!
June 20th, 2007 at 7:35 am
This tool is great. Far more detailed than I have ever seen. The only drawback is that it only uses 6 models. I’ve used tools that do hundreds of models. So, the graphs are great, but the usefulness of the data is depreciated.
This also gives a more positive outlook than I have ever seen before. IT says that with my current contributions and balance, I would have 100% success rate retiring at 47 (2027) and having an annual retirement income of $104000. I doubt that is accurate. Other tools have given me near 80% success rate on the same but retiring at 55, a more believable result.
June 20th, 2007 at 7:40 am
broknowrchlatr: That’s what I was thinking. I need to spend a little more time to understand the charts and make sure they make sense.
June 20th, 2007 at 7:51 am
I prefer a calculator on Bloomberg. http://www.bloomberg.com/invest/calculators/retire.html
June 20th, 2007 at 7:55 am
Same here. The results seem too positive to me. Great detail . . . I hope it’s right.
June 20th, 2007 at 12:07 pm
I think most calculators don’t factor in social security because it’s a moving target so that’s one area where the optimism comes in.
The Bloomberg calculator has really one big bug. It does not calculate your expenses correctly by reducing your income by the investment contributions so it’s totally inaccurate for anybody who contributes a high percentage of income.
June 20th, 2007 at 2:42 pm
Since I’m self employed I’ve never been able to figure out how to properly use these types of calculators. There are so many out there and none that I’ve found take into account the needs of those who are self employed or running their own business. Where’s the retirement calculator for those who have SEP IRAs with irregular contributions? Or how about those who are pouring all their resources into a small business with huge upside potential, or have their retirement investments tied up in other ways like real estate or something like that? How will we know how close we are to retirement?
June 20th, 2007 at 6:09 pm
For myself, the IRA and 401(k) max is a non-negotiable must. I dont consider that part of my earnings available for any other budgeting. So if I have lifestyle inflation, then I’m going to need to make more money. Otherwise I can’t afford it ( whatever it is: a kid, a car, a boat, whatever).
June 20th, 2007 at 6:43 pm
I don’t consider having a child “lifestyle” inflation. I consider it “life.” I don’t want to skip the joys of life in a mad dash for retiring at age 45. I’d rather have children and homes and aim for a retirement at 55 if need be.
June 24th, 2007 at 10:54 pm
What’s with the bit about phased decreases in spending after age 55. Where would my spending decrease?
June 25th, 2007 at 11:23 pm
If an adult earning minimum wage has a child, wouldn’t that have to be considered lifestyle inflation - and inappropriate?
Which reminds me of something which has been bugging me for some time:
If you can’t earn enough to support a family, playing by the rules requires you to not have children. Fair enough. But if you don’t have children and you also don’t earn enough to save a sufficient nest egg, how are you to be supported when you can no longer work?
July 3rd, 2007 at 12:29 pm
This calculator is serioujsly flawed.
The result I got is that my portfolio will be worth approx -$500,000 after 30 years and that my retirement plan has a success rate of 0.0 percent.
Obviously, this result is not mathematically possible. Who designed this thing?
July 3rd, 2007 at 1:28 pm
MW: I invite you to play with the numbers, calculate the specific flaw and e-mail the developer. He gives his e-mail all over the site.
July 3rd, 2007 at 3:53 pm
OK, thanks. Obviously, once a portfolio reaches zero, it can’t go any lower! (Also, you can’t retire.)
July 3rd, 2007 at 4:14 pm
I don’t know, I could see a negative portfolio as being in debt. The nature of the calculation is how much you’ll have at various points given the assumptions. If you say that you need 10,000,000 a year to live on, but only make $100 a year, I can see how negative numbers would result.
August 30th, 2007 at 8:31 am
[…] Lazy Man from Lazy Man and Money suggests checking out a fine retirement calculator to determine when it’s time for you to “hang in the towel”: When Can You Retire? […]
January 27th, 2008 at 5:43 am
[…] When Can You Retire? @ Lazy Man and Money: Describes and links to what looks like a promising retirement calculator. […]