Please note that the earlier you retire, the lower your benefit payment would be. If you expect to have a government benefit payment when you retire (e.g., social security, old age security), you can subtract this amount from your expenses. Starting to track your expenses today would be a good step if you aren’t sure of what your current spending habits are. Input your best guess for your annual expenses in retirement. Using a return assumption of 4% to 7% would be reasonable. The US stock market has delivered a real return of 6.9% per year from 1871 to 2017. In retirement, Mike expects to have expenses of $25,000 per year, and would like to retire at age 60 using a withdrawal rate of 3.5%.Īfter you’ve inputted your assumptions, everything else is automatically calculated for you. Mike has already managed to save up $5,000, and will be able to save an additional $12,000 per year, with investment returns of 5% per year (real returns after inflation). To get a handle on how the tool works, let’s take the example of Mike – a 24 year old who has been working for a couple of years, and wants to figure out how he can set himself up in a solid position for his eventual retirement. How to Use the Retirement Date Forecasting Toolįirst things first, navigate to the “Retirement Forecasting Tool” tab, and enter in your own assumptions. Some good fun to be had in pressing the buttons and watching the charts fly by… ![]() If you don’t have excel, the Google Sheets version has 95% of the same functionality and is more than serviceable. I highly recommend using the Excel version if you have access to Excel, given that it includes a scenario analysis feature which I’ve yet to be able to replicate in Google Sheets, and because it lets you switch between charts to view at the press a button. To get started, please download a copy of the Retirement Date Forecasting tool. With this knowledge in hand, we can then set long-term targets that will help us reach our retirement goals.
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