>If coffee is too hard to give up, try soft drinks.
Right. You could get by with saving less because you will also die earlier! :P
Show HN: Investment Calculator – A simple retirement calculator
111–120 of 218 posts
Re: Show HN: Investment Calculator – A simple retirement calculator
#112Those seeking a much more sophisticated retirement calculator, where you can set nearly every parameter, such as rate of return, amount saved, and nearly everything else, should checkout firecalc. You can select different withdrawl rate strategies, different investment strategies, deferred compensation strategies, different investment mixes, and many, many other things. The interface isn't as pretty, but it is unbeli…
Is there anything on how to figure out what your retirement goal should be? Like how am I supposed to estimate costs I will need in retirement to know how much I need to start with.
A good guesstimate:
1. Figure out your current lifestyle expenses (you can track this over time if you use mint.com or other websites)
2. Subtract your mortgage if you plan to have it paid off by retirement
3. Add in fudge factors for healthcare expenses and increased or decreased discretionary expenses, depending on the lifestyle you think you will live
As with any planning, you can stare at the numbers forever and not feel satisfied. There is no one true answer.
Re: Show HN: Investment Calculator – A simple retirement calculator
#113Those seeking a much more sophisticated retirement calculator, where you can set nearly every parameter, such as rate of return, amount saved, and nearly everything else, should checkout firecalc. You can select different withdrawl rate strategies, different investment strategies, deferred compensation strategies, different investment mixes, and many, many other things. The interface isn't as pretty, but it is unbeli…
Is there anything on how to figure out what your retirement goal should be? Like how am I supposed to estimate costs I will need in retirement to know how much I need to start with.
The normal optimistic number is a 4% yearly WD rate, so 25x yearly expenses saved. I’m a believer in no more than 3% withdrawal, so at least 33 years of expenses.
Re: Show HN: Investment Calculator – A simple retirement calculator
#114Earlier quoted context omitted.
Do you mean "frontloading" the year? As in 1000 jan, 900 feb, etc? Or was it a typo and you meant decreasing your spending?
Smoothly decreasing every month for the entire savings period. Maybe it isn't popular because income tends to increase over the course of a career?
It doesn't make much sense to do logically because you can front-load a lot less at the beginning of your career. It's far better to design a sustainable lifestyle you like when starting out and aggressively fight scaling it up with your income. If you do that the numbers will work themselves out.
Re: Show HN: Investment Calculator – A simple retirement calculator
#115Be careful with this: The projections are gross (ie not inflation-adjusted) and the advice buried in the explanatory text below does not sufficiently discuss this issue. It says you can do a "simple" calculation by applying one year's worth of inflation versus a compounded rate of return. Assuming historical inflation rates, the value of the savings it projects will be significantly eroded compared to what it shows.…
Yeah, it's also using a 9% rate of return for the "conservative" scenario and 12% for aggressive. Due to the exponential nature of compound interest, just a single point of overoptimism in your real growth number leads to a massive overestimation of your results. 1.07 ^ 30 = 7.6, 1.09 ^ 30 = 13.3, and 1.12 ^ 30 = 30.0 It's baseline assumptions are way off.
This effect of tiny changes having massive impacts is why Gordon Brown’s smash and grab raid on the private sector pensions, coupled with artificially low interest rates was so damaging and lead directly to the property bubble and the financial crisis in the UK.
Re: Show HN: Investment Calculator – A simple retirement calculator
#116Re: Show HN: Investment Calculator – A simple retirement calculator
#117Earlier quoted context omitted.
Yeah, it's also using a 9% rate of return for the "conservative" scenario and 12% for aggressive. Due to the exponential nature of compound interest, just a single point of overoptimism in your real growth number leads to a massive overestimation of your results. 1.07 ^ 30 = 7.6, 1.09 ^ 30 = 13.3, and 1.12 ^ 30 = 30.0 It's baseline assumptions are way off.
Yowzers! Please tell me what this magical investment is where I can expect an average rate of return of 9% (let alone 12%). That is off the charts optimistic.
Assuming dividend reinvestment, the S&P 500 has returned an annual average of 10% nominally (7% real), over the last 100 years or so.
Re: Show HN: Investment Calculator – A simple retirement calculator
#118Those seeking a much more sophisticated retirement calculator, where you can set nearly every parameter, such as rate of return, amount saved, and nearly everything else, should checkout firecalc. You can select different withdrawl rate strategies, different investment strategies, deferred compensation strategies, different investment mixes, and many, many other things. The interface isn't as pretty, but it is unbeli…
Am I missing something? The calculator only shows how long my money will last given a spending rate and starting value.
Re: Show HN: Investment Calculator – A simple retirement calculator
#119This is a really good interface but the assumptions backing the results seem weak. The growth rate on conservative and aggressive portfolios are high. The recommended amounts of saving should be as % of income. Recommending someone that makes 100k save 100 dollars a month is not great. It's also sad that the maximum amount saved per month is 1k where even just maximizing 401k is 1.5k a month.
Yeah, the return rate, even for conservative is WAY too high.
The return isn't adjusted for inflation, so it's not that far off. That's probably misleading though.
Re: Show HN: Investment Calculator – A simple retirement calculator
#120Earlier quoted context omitted.
Yeah, it's also using a 9% rate of return for the "conservative" scenario and 12% for aggressive. Due to the exponential nature of compound interest, just a single point of overoptimism in your real growth number leads to a massive overestimation of your results. 1.07 ^ 30 = 7.6, 1.09 ^ 30 = 13.3, and 1.12 ^ 30 = 30.0 It's baseline assumptions are way off.
Wow, that's pretty crazy - ~5% bonds for conservative and ~7-8% for aggressive would have been more appropriate in my opinion. And I feel even those numbers may be a little optimistic. Currently it's more like "what if you have a great market year every year until you retire" or "what if you can reliably beat the market" - neither of which is likely to happen.
To be fair the total annualized return of the S&P 500 over long periods is roughly 10%. You don't have to reliably beat the market to reach those numbers. It's interesting to play around with: