Comments on: Estimating Retirement Income Needs – The Discounted Approach http://allfinancialmatters.com/2008/08/19/estimating-retirement-income-needs-the-discounted-approach/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Sat, 21 Nov 2009 13:00:57 -0800 http://wordpress.org/?v=abc hourly 1 By: ETF Guy http://allfinancialmatters.com/2008/08/19/estimating-retirement-income-needs-the-discounted-approach/comment-page-1/#comment-350770 ETF Guy Sun, 24 Aug 2008 01:27:52 +0000 http://allfinancialmatters.com/?p=2762#comment-350770 Thinking about retirement amounts is certainly a worthwhile activity. However, what I've always wanted is a calculator to show me how I'm doing compared to how I should be doing for someone my age. Thinking about retirement amounts is certainly a worthwhile activity. However, what I’ve always wanted is a calculator to show me how I’m doing compared to how I should be doing for someone my age.

]]> By: Todd A http://allfinancialmatters.com/2008/08/19/estimating-retirement-income-needs-the-discounted-approach/comment-page-1/#comment-348915 Todd A Wed, 20 Aug 2008 02:11:09 +0000 http://allfinancialmatters.com/?p=2762#comment-348915 I can't pass up this golden opportunity to plug the software I've spent much of the last 3 years producing, LifeCALC. It makes this genre of analysis a breeze, not to mention the ability to simultaneously analyze/solve many goals/responsibilities. I couldn't find a tool that would let me do this for my family responsibilities, and the rest is history ... I can’t pass up this golden opportunity to plug the software I’ve spent much of the last 3 years producing, LifeCALC. It makes this genre of analysis a breeze, not to mention the ability to simultaneously analyze/solve many goals/responsibilities. I couldn’t find a tool that would let me do this for my family responsibilities, and the rest is history …

]]> By: muddlehead http://allfinancialmatters.com/2008/08/19/estimating-retirement-income-needs-the-discounted-approach/comment-page-1/#comment-348903 muddlehead Wed, 20 Aug 2008 01:00:57 +0000 http://allfinancialmatters.com/?p=2762#comment-348903 ok gang my wife and i are real lucky to be retired at 53 - living on approx 60k easy. mortgage a grand a month, health insurance for the two of us high deductible $308 per month, swim/tennis club $130 per month. and we're total jocks so we expect to do this a long time. when you get to be our age; you spend effectively zero on clothes, go out to eat very little - essentially remove frivolous expenditures from the picture. hard to realize in your 20's and 30's how much that saves... ok gang my wife and i are real lucky to be retired at 53 – living on approx 60k easy. mortgage a grand a month, health insurance for the two of us high deductible $308 per month, swim/tennis club $130 per month. and we’re total jocks so we expect to do this a long time. when you get to be our age; you spend effectively zero on clothes, go out to eat very little – essentially remove frivolous expenditures from the picture. hard to realize in your 20’s and 30’s how much that saves…

]]> By: Bozo http://allfinancialmatters.com/2008/08/19/estimating-retirement-income-needs-the-discounted-approach/comment-page-1/#comment-348886 Bozo Tue, 19 Aug 2008 23:58:30 +0000 http://allfinancialmatters.com/?p=2762#comment-348886 PS to JLP and Irena: If you use the moneychimp annuity calculator, using $1,000,000 as the starting principal, a 2% real rate of growth (5% - 3% inflation), and 25 years payout, you get a smidge over $50,000/year. So all these calculators seem to work alike. It's just if you use inflation-adjusted dollars (subtracting inflation from your anticipated return, as I did above), you get a better feel for what you'll really need. Of course, the irony in all these calculators is the assumptions they make. Will you really average 5%? Will inflation really be 3%? Would you have to live through the year 2200 to see those "averages"? That's a whole 'nuther issue, as they say. PS to JLP and Irena:

If you use the moneychimp annuity calculator, using $1,000,000 as the starting principal, a 2% real rate of growth (5% – 3% inflation), and 25 years payout, you get a smidge over $50,000/year. So all these calculators seem to work alike. It’s just if you use inflation-adjusted dollars (subtracting inflation from your anticipated return, as I did above), you get a better feel for what you’ll really need.

Of course, the irony in all these calculators is the assumptions they make. Will you really average 5%? Will inflation really be 3%? Would you have to live through the year 2200 to see those “averages”? That’s a whole ‘nuther issue, as they say.

]]> By: Bozo http://allfinancialmatters.com/2008/08/19/estimating-retirement-income-needs-the-discounted-approach/comment-page-1/#comment-348873 Bozo Tue, 19 Aug 2008 22:53:42 +0000 http://allfinancialmatters.com/?p=2762#comment-348873 Irene, you might want to check out the calculators at www.moneychimp.com. Start with the compounded interest calculator: your current value is what you've saved for retirement; you then add the approximate amount you'll save until retirement per year; then the number of years until you plan to retire; then (finally) a conservative interest rate to compound the above. That will give you the amount in non-inflation-adjusted dollars you'll have to start retirement. The switch to the annuity calculator. Insert the amount you'll have to start retirement, the number of years you expect to live, a projected interest rate to compound, and you'll see the yearly payout. It's simplistic, and doesn't adjust for inflation, but it's free and easy to use. At least it's easier than a manual calculator. Yours, Bozo Irene, you might want to check out the calculators at http://www.moneychimp.com. Start with the compounded interest calculator: your current value is what you’ve saved for retirement; you then add the approximate amount you’ll save until retirement per year; then the number of years until you plan to retire; then (finally) a conservative interest rate to compound the above. That will give you the amount in non-inflation-adjusted dollars you’ll have to start retirement. The switch to the annuity calculator. Insert the amount you’ll have to start retirement, the number of years you expect to live, a projected interest rate to compound, and you’ll see the yearly payout.

It’s simplistic, and doesn’t adjust for inflation, but it’s free and easy to use. At least it’s easier than a manual calculator.

Yours,

Bozo

]]> By: Irina http://allfinancialmatters.com/2008/08/19/estimating-retirement-income-needs-the-discounted-approach/comment-page-1/#comment-348859 Irina Tue, 19 Aug 2008 22:01:04 +0000 http://allfinancialmatters.com/?p=2762#comment-348859 Are there any websites that allow you to input retirement values currently (what have been saved up to this point) and what the prospects for retirement are assumming current rates of savings? I believe this would help people better guage what they will have available during retirement. Which may enable them to save more if their savings at retirement is not enough. Are there any websites that allow you to input retirement values currently (what have been saved up to this point) and what the prospects for retirement are assumming current rates of savings?
I believe this would help people better guage what they will have available during retirement. Which may enable them to save more if their savings at retirement is not enough.

]]> By: JLP http://allfinancialmatters.com/2008/08/19/estimating-retirement-income-needs-the-discounted-approach/comment-page-1/#comment-348777 JLP Tue, 19 Aug 2008 19:43:31 +0000 http://allfinancialmatters.com/?p=2762#comment-348777 Matt, I just came up with $50,000 off the top of my head. Matt,

I just came up with $50,000 off the top of my head.

]]> By: Matt http://allfinancialmatters.com/2008/08/19/estimating-retirement-income-needs-the-discounted-approach/comment-page-1/#comment-348774 Matt Tue, 19 Aug 2008 19:38:31 +0000 http://allfinancialmatters.com/?p=2762#comment-348774 I don't think that the 50K per year sounds greedy but when you're at your retirement age would you really need as much money? What kind of assumptions are being taken with that 50K - is the house paid off? Do you have any existing debts? If the answer is no to these then I can see needing more money but if they're paid off and you're just paying for your living expenses and travel then you might not need as much money. I don’t think that the 50K per year sounds greedy but when you’re at your retirement age would you really need as much money? What kind of assumptions are being taken with that 50K – is the house paid off? Do you have any existing debts? If the answer is no to these then I can see needing more money but if they’re paid off and you’re just paying for your living expenses and travel then you might not need as much money.

]]> By: terry http://allfinancialmatters.com/2008/08/19/estimating-retirement-income-needs-the-discounted-approach/comment-page-1/#comment-348737 terry Tue, 19 Aug 2008 17:46:29 +0000 http://allfinancialmatters.com/?p=2762#comment-348737 "Let’s say you want to retire at age 65 on January 1, 2009. Not including Social Security, you desire $50,000 in income the first year of your retirement and you would like that $50,000 to increase 3% each year as an inflation adjustment. You expect to live 25 years in retirement." Sounds greedy. Who needs $50K a year in retirement? “Let’s say you want to retire at age 65 on January 1, 2009. Not including Social Security, you desire $50,000 in income the first year of your retirement and you would like that $50,000 to increase 3% each year as an inflation adjustment. You expect to live 25 years in retirement.”

Sounds greedy. Who needs $50K a year in retirement?

]]> By: JLP http://allfinancialmatters.com/2008/08/19/estimating-retirement-income-needs-the-discounted-approach/comment-page-1/#comment-348727 JLP Tue, 19 Aug 2008 17:12:43 +0000 http://allfinancialmatters.com/?p=2762#comment-348727 No, it's not a problem. I just needed a basis for a starting point. Naturally, the farther you are from your goal, the more difficult it is to gauge how much you're going to need. No, it’s not a problem. I just needed a basis for a starting point. Naturally, the farther you are from your goal, the more difficult it is to gauge how much you’re going to need.

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