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Retirement algorithm

bczoom

Super Moderator
Staff member
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Has anyone found or come up with a decent algorithm to figure out what it takes (monetarily) to retire?

I'm thinking of a spreadsheet or something where you plug in your (proposed) retirement age, current savings as well as what you spend on things and it'll figure out what you'll need?

For those of you that have retired, what are some things you didn't plan on or the cost is significantly different than what you thought and it either helped or hurt you financially?
 

California

Charter Member
Site Supporter
Before I retired (1998, age 54) I bought Quicken's premium edition or whatever its called, about $100, just for the retirement analytical tools. I thought I could afford to retire but I wanted to run the numbers and long term projections. It was excellent - far more sophisticated than I expected.

It projects your possible outcomes considering several possible future economic scenarios.

Fidelity Investments offers a similar analysis but I'm not sure it exceeds Quicken's. I think all the big brokerage houses offer this service.
 

Gatorboy

Active member
The toughest part is determining how long you will live after retirement. The sooner you plan on departing, the less you need to save.
 

beds

New member
Gatorboy said:
The toughest part is determining how long you will live after retirement. The sooner you plan on departing, the less you need to save.
Yeah, that's the crappy part of that equation - planning your death date! I plugged in my equation and it was asymptotic - I approached the retirement age but never reach it.
 

mtntopper

Back On Track
SUPER Site Supporter
beds said:
Yeah, that's the crappy part of that equation - planning your death date! I plugged in my equation and it was asymptotic - I approached the retirement age but never reach it.

That is exactly why you say "to hell with it" and retire earlier than later. Retire early so you can get some benefit and enjoyment out of life and retirement. You can always go back to work later if you financially need too, but once your dead, you can't retire again.....and you don't need to work if your dead.....:confused2: Pretty simple equation!!!!!!
 

DaveNay

Klaatu barada nikto
SUPER Site Supporter
mtntopper said:
That is exactly why you say "to hell with it" and retire earlier than later.
You guys need to all convert to ultra-liberal democrats, then you can "retire" to your double wide, and collect disability with out having a guilty concience.

:horsepoop:
 

ghautz

Bronze Member
Site Supporter
T. Rowe Price has (had?) a retirement planning analyzer program. You might check with them to see if it is still available. I used it extensively in planning my retirement. I also set up a Quattro Pro spreadsheet for an independent check. If you are reasonably familiar with formulas in spreadsheets, it is not difficult to do.

I used pretty conservative figures in my planning and for the last 5 years everything has gone better than planned.
 

REDDOGTWO

Unemployed Veg. Peddler
SUPER Site Supporter
The items that have gone up the most since I quit working in 1999 are health insurance, energy costs and real estate taxes. The other major item is a son who hurt his back and cannot work right now, so I get to pay for a family and a single plan for a while.
 

beds

New member
A friend of mine lived in a nice house, he and his wife both worked and were almost mortgage-free and in their mid-thirties. Then they won a million bucks (tax-free up here). They did their equation, and based on their desire to travel when they retire, get new vehicles, take care of their children, etc. they both still work! I don't think they mind working, and neither do I, but it still is deflating for a non-millionaire!
 

California

Charter Member
Site Supporter
bczoom said:
For those of you that have retired, what are some things you didn't plan on or the cost is significantly different than what you thought and it either helped or hurt you financially?
To answer your second question - predicting costs isn't too hard but predicting future investment returns, and unexpected events, is more difficult than it looks. A realistic projection starts in a narrow range but quickly has a very broad range of possible values. You can average the possible future scenarios but it's still a gamble whether the real future will fall within the range of your projections.

Life is a gamble. Accept a tiny but real chance of going broke instead of waiting until you can cover any outcome, and you might decide to retire 15 years earlier.

When I was doing my planning was in the midst of the 1990's boom. It was clearly unreal, that sort of growth couldn't go on forever. Days after I bailed (7/98) the market went flat, then a year late resumed the 'irrational exuberance' Greeenspan had warned about. I stayed fully invested, but then sold all the volatile stuff after it had fallen back to about 1998 levels in mid to late 2000. Pure gambling, but the 5 and 10 year growth rates were still spectacular if I could just forget the nightmare of the final 6 months. My projections made as of 6/98 remain pretty accurate but what happened in the meantime was beyond my wildest imagination. Expect a few periods like that during your retirement.

Part of my planning is allowing a very slight chance I might have to sell all real estate to cover high costs in extreme old age. I've made it clear to the kids that barring a collapse of the whole US economy they will probaly get the ranch, but don't count on it for another 40 years.

Mom just turned 96. As a retired college professor she has a good government pension (and health plan) that met her needs, so she never accumulated any savings. But early this year I had to arrange a HELOC (home loan similar to a remodel loan, draw just what you need) for the first 20% of the value of her home to pay for a 24 hour caregiver to live there. Now we're good for several years, but eventually sis and I may have to chip in to keep this arangement going. You can't predict everything, at least she made it to 96 on her own resources.

My main advice to anyone a generation younger is to put a large percentage of your income into long term savings and investment instead of using it for a showy lifestyle. You will be a millionaire sooner than you expected.
 

Cityboy

Banned
bczoom said:
Has anyone found or come up with a decent algorithm?

AlGore has rhythm? :eek: :confused2: :hide: :D

I'm sure you've searched the internet already. Just about all mutual fund companies have a retirement calculator, but they require a login, which requires an account usually. Do you invest through one or more of the fund companies?
 

AndyM

Charter Member
Gatorboy said:
The toughest part is determining how long you will live after retirement. The sooner you plan on departing, the less you need to save.

Now you can plug those numbers into the spreadsheet too... :smileywac
Death Test
 

Av8r3400

Gone Flyin'
Gatorboy said:
The toughest part is determining how long you will live after retirement. The sooner you plan on departing, the less you need to save.

I figure I can retire tomorrow.

Unfortunately, then I need to die next Tuesday. :mad:
 

California

Charter Member
Site Supporter
algorithm = Al Gore? Astrology?? Tarot???!

I never would have thought of those.

I dunno, sometimes I think I live in a different universe than many of my fellow Americans. Mine makes sense to me and I assume you find equal satisfaction in yours.

No wonder we all have a hard time agreeing on politics!:D

Zoom, are you getting anything out of this discussion that you can use?
 

HGM

New member
Its not exactly what your asking for but Bankrate has all kinds of calculators that should give you an idea what you may have at retirement(among others)..
 

bczoom

Super Moderator
Staff member
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Cityboy said:
I'm sure you've searched the internet already. Just about all mutual fund companies have a retirement calculator, but they require a login, which requires an account usually. Do you invest through one or more of the fund companies?
Yes but I like getting info from all the members here as some have already retired and many here are around my age so they're in about the same situation.
 

bczoom

Super Moderator
Staff member
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Thanks CB,

Their algorithm gives me some final numbers but I was hoping to find something that'll break things down in more detail.

This one in particular.
4. Enter the desired replacement rate (the percentage of your current income you would like to receive during retirement): (as a percent of current income)

That's the part I need help figuring out. What am I going to need?

I ran some initial numbers through it and their results just don't seem to work.

I plugged their numbers into Excel and it had me broke 10 years before the age of death I entered.
 

California

Charter Member
Site Supporter
bczoom said:
4. Enter the desired replacement rate (the percentage of your current income you would like to receive during retirement): (as a percent of current income)

That's the part I need help figuring out. What am I going to need?
Different advisors will tell you different things here. A major component is whether you will move to a more expensive or cheaper community.

Also, will you start new hobbies such as world travel or restoring old cars.

My own personal estimate would be a slight increase in costs, assuming no major lifestyle change but increased tourism. YMMV.
 

Cityboy

Banned
bczoom said:
.

That's the part I need help figuring out. What am I going to need?

I ran some initial numbers through it and their results just don't seem to work.

I plugged their numbers into Excel and it had me broke 10 years before the age of death I entered.

Now you've got me curious. :confused2: Sounds like you are trying to do something really expensive before you die. What are you up to BC?

My retirement plan is simply maxing out our 401K plans, elimination of all debt, excercise and stay healthy and then enjoy doing whatever we choose. I think whatever is the maximum you can invest and accumulate, while enjoying your life and family along the way is the route that should be taken. Owning some good real estate and a mix of other asset classes that can provide future residual income is part of what we are doing. I don't know how long I will live, so we live for today while saving for tomorrow as much as possible. I figure somewhere around 20-25% of gross income invested will cover just about anything. That seems like a lot, but I started saving seriously at age 23 at 5% of my gross. With each income increase, I bumped it up a percent or two, so I never missed it. I'll just keep adding that percent till I reach the IRS maximum. Citygirl invests the same way, so we avoid any arguments about where the money goes. For sideline business income, I set up a SEP-IRA. It feels good to watch your sweat equity continue to grow, even after you quit doing the sideline work. I plan to retire from my current occupation between age 56-60, then take a breather and embark on a second, more fun career teaching others what I managed to learn in my lifetime.
 

bczoom

Super Moderator
Staff member
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Cityboy said:
Now you've got me curious. :confused2: Sounds like you are trying to do something really expensive before you die. What are you up to BC?
No particular plans that are financially huge.

I'm going to start an Excel spreadsheet. Let me get it going then post it here to see if y'all can find things I'm missing.
 
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