The Complete Retirement Planner Blog
A Savings Goal vs. An Income Plan.
A simplified approach to retirement planning revolves around projecting your annual expenses, and then multiplying that amount by 20-25 years to come up with a savings goal. Creating an accurate and itemized list of all expenses expected during retirement is an essential step in responsible financial planning, but the idea of simply multiplying that total by 25 years to arrive at a savings goal is seriously lacking on many levels. Even if you figure out the optimal savings needed (use a large margin of error when trying to predict the future),is running out of money in your 90th year your...
9 Retirement Planning Topics That Need Clarification - Part II
The following is Part II of our 1.1.22 blog post:At What Age Should You Claim Social Security? Everyone's circumstances and needs are unique, so only you know the answer to this. The best course of action is to make sure that you understand all of your options so that you will be comfortable with your decision in the long run. In general, the earliest that you can start claiming Social Security is at age 62. However, your benefit is reduced by ~8% for every year that you claim before your Full Retirement Age (age 66 if born before 1960, otherwise...
9 Retirement Planning Topics That Need Clarification - Part I
Especially at the beginning of a new year, there seems to be a never-ending supply of articles offering advice about retirement planning. Some offer well thought out points, some offer generic assumptions, some offer half-truths, and some don't seem to have much to offer at all. The following topics need some clarity before taking them too seriously:• Plan On Replacing 75% Of Your Salary In Retirement. Really? Many articles suggest that you should plan on replacing 70% - 80% of your gross salary in retirement, so I split the difference. In general terms, with a salary of $75,000 per year, you...
Using Monte Carlo Simulations For Retirement Planning - Fool's Gold?
If you’ve ever spoken with a financial adviser about retirement, they probably suggested running a Monte Carlo simulation program to help determine how financially prepared you are. These programs randomly combine historical outcomes (annual market returns for the most part) with personal financial data to arrive at a probability of success (i.e. that you won’t run out of money in retirement). Telling clients that they have run thousands of scenarios to arrive at this information sounds like they have really worked hard to earn their money. But there are a few problems. To begin with, not all of these programs...