# What retirement calculators do you use?



## MoneyGal

I'm very curious about this - what retirement income calculators do people in this forum use? (Do people in this forum use retirement income calculators?)

Tell me about your favourite. Or, if you haven't got a favourite, tell me what would make a retirement income calculator a favourite one for you. (I am not developing a retirement income calculator...)


----------



## steve41

I may have mentioned this before, but it bears repeating. My mother went to high school in the thirties. She kept an old textbook which she would refer to occasionally. It consisted of 3 tables.... 'sinking fund', 'annuity' and (I think) 'future value'

Based on what you wanted to do (determine how much you should save paycheck to paycheck to achieve a certain retirement, or based on a particular saving amount, how much you could look forward to in retirement) as well as varying your retirement age, interest rate etc.... you could do a lot. Mind you, taxation wasn't a major part of the investment process then, nor was inflation nor CPP/OAS, however, use of the 3 tables was taught in high school home ec class.

This is before we had computers or calculators.

My other comment relates to this fact.... the math behind the time value of money, taxation and inflation is pretty much set in stone. Why then does each retirement calculator give different results? After all, based on the same T4/T5 data, Quicktax will give the same answer as its competitors, the various brands of financial calculators will give the same answer for PV.... 

Food for thought.


----------



## MoneyGal

How did I know you'd be the first to respond? 

I am not so much interested in "how to get it right" (I know how to read a sinking table and I actually have my grandmother's "Home Economics" text from the 1920s with similar info) -- I am interested in what people use, and, if people give me links, I'm interested in seeing whether randomization is a factor and, if yes, whether Monte Carlo is used and, if yes, what MC model is used. 

Thanks for the food for thought, though. This is my main area of interest right now, and I'm doing a lot of thinking.


----------



## 411guy

I tend to use 2 calculators as "sanity checks" against each other: http://www3.troweprice.com/ric/ric/public/ric.do AND http://www.firecalc.com/index.php

The former is American, but I use it with modifications that work for my circumstances. The latter I picked up at this forum actually.

I am close to retirement (within 5 years) and pretty much financially ready. I use these calculators to answer the question: what would be the lowest amount my retirement savings portfolio could fall to trigger "red flags" that I could outlive my savings? Of course you have to put in the relevant assumptions.


----------



## Racer

I have used firecalc as well, but haven't been to that site in about a year.


----------



## Maltese

I gnerally fiddle around with two calculators. They are:

The Pension Puzzle by Bruce Cohen at:
http://www.fiscalagents.com/toolbox/cal/rrsp/pensioncalc.shtml

and The Standard Retirement Calculator at Retirement Advisor:
https://www.retirementadvisor.ca/retadv/apps/tools/tools.jsp

The Pension Puzzle tells me I need way more money to retire. I'd be interested if others have the same results too. If not, I'm doing something wrong.


----------



## MoneyGal

Oh - and different results from different calculators - I presume the main factor is the varying, critical inputs to the calculators, namely expected return and expected volatility for asset classes. Right?

Edited to add: several hours went by between my composing this and hitting "enter," during which my five-year-old commandeered my computer to watch "Robots." Thanks for the additional responses!


----------



## Maltese

MoneyGal said:


> Oh - and different results from different calculators - I presume the main factor is the varying, critical inputs to the calculators, namely expected return and expected volatility for asset classes. Right?
> 
> Edited to add: several hours went by between my composing this and hitting "enter," during which my five-year-old commandeered my computer to watch "Robots." Thanks for the additional responses!


The ones I use don't ask anything about asset classes - just expected return. The 2 main differences that I can see with the 2 I use is that retirement advisor only gives the choice for DB pension as being indexed and not indexed and The Pension Puzzle lets one put in a specific indexing rate. I use 0 indexing for both calculators.


----------



## steve41

I had a user who had been in the biz for eons. His claim was that MC had gone through several up and down cycles over the years. It had its resurgences whenever markets were down. His thought was that when the client came to see him in a down market, he needed a distraction, so he hauled out the MC calculation. In order to do something other than make excuses for the sorry state of his client's portfolio, he would get into risk analysis. This gave the client some needed perspective, as well as establishing the planner's credibility. Unfortunately, once markets went up again, MC took a back seat.

BTW, MC has been around for ages in engineering and economics as well as PFP. Back in the 60s, I can remember building an MC model.... Fortran always had an RND function for exactly that purpose.


----------



## AS52

*Which Retirement Calculator*

When all is said and done, I find it best to create an Excel spreadsheet which considers all sources of income (columns) plotted against age (rows). Excel allows you to duplicate the spreadsheet and apply different scenarios to each sheet (rate of return, inflation, decisions on when to apply for CPP, etc.). Each scenario should apply one or more aspects of income or expenditure risk. Focus on RISKS !!!

What was most enlightening to me was the option for early application for CPP (since CPP has some inflation protection built in). In my case it appears best to delay CPP if it is not needed before 65. This results in a higher percentage of inflation protected income after 65. Others needing the CPP before 65 have reduced inflation protection in actual dollars due to the reduced base amount of the payout.

I then compare and correlate my spreadsheet to various calculators out there. I assume that my costs will vary by age. I want to travel when I am physically able to do so. I amortize my automobile costs every year. However, I don't plan on needing money for a new car when I am over 85. I also do not want to leave a large legacy. My will should include the phrase "being of sound mind, I spent it all".


----------



## steve41

AS52 said:


> What was most enlightening to me was the option for early application for CPP (since CPP has some inflation protection built in). In my case it appears best to delay CPP if it is not needed before 65. This results in a higher percentage of inflation protected income after 65. Others needing the CPP before 65 have reduced inflation protection in actual dollars due to the reduced base amount of the payout.


Well, not exactly. The other issue you must consider is life expectancy and the matter of net to your estate. When you run the numbers, track tax properly, and compute what your estate will net should you die prematurely, then taking CPP at 60 can make sense if you know you may die early. Tax and life expectancy have a major bearing on determining the time you elect to take CPP,


----------



## brad

If it were applicable to Canadians, I would use ESPlanner:

http://www.esplanner.com/

It calculates a sustainable living standard for you, and then figures out a lifetime plan that you can follow to maintain that standard. This seems like a really smart approach to retirement planning and personal financial planning in general, but unfortunately it's oriented entirely to US customers. It would be great if someone could create a Canadian version but it probably won't happen as the potential market here is too small.


----------



## MoneyGal

Ah, yes; lifecycle economics. A fantastic approach; one I am really interested in - including how to adapt Kotlikoff's thinking to Canada and how to implement a similar system for Canadians. 

Take a look at the "Life-Cycle Income Smoothing" calculator here for some capacity to play around with income-smoothing. (And PM me if you have questions about that calculator...)


----------



## steve41

How does it handle income tax? I didn't see much emphasis on tax accuracy and time. RRIFmetic seems to cover a lot of the issues they mention... changing jobs, retiring early, opting for early/late CPP, varying lifestyle, opting for TFSA, rrsp/nonreg, RESP, loans vs RRSP, leaving a specific estate....


----------



## MoneyGal

Steve - if you are referring to the QWeMA calculator, the answer is "it doesn't." If you are asking about the ESPlanner calculator, I don't know the answer. And yes, I concur, RRIFmetic is a good choice for income-smoothing, too.


----------



## brad

FYI, it looks like ESPlanner can be adapted to work in Canada and for various expatriate situations (interesting to me because I'm a dual citizen), although the approach isn't particularly elegant: here's a note I found in the help forum:

You can run ESPlanner turning off U.S. taxes and Social Security benefits. You simply specify that you live in any state in the U.S. and then go to the tax and benefits assumptions screen and specify that starting in the current year federal and state payroll and income taxes as well as Social Security benefits will be cut by 100 percent.

Having done this, you need to enter the government pension you expect to receive from your country. You can enter this pension in the pensions and annuities folder.

You also need to enter your future projected tax payments as special receipts. Alternatively, you can enter your earnings and rate of return net of taxes.

Suggestions for the following US/Canada expatriate situations:

1. Americans in Canada
- Disable the US tax calculations by reducing US taxes and Social Security taxes by 100%
- If you are entitled to CPP benefits, enter CPP as a pension NOT covered by Social Security employment. This will allow you to take advantage of ESPlanner's Social Security calculation engine to determine any Social Security benefit you are eligible to receive less the Windfall Elimination Provision for CPP. Index CPP fully to inflation.
- If you are entitled to OAS, enter OAS as an annuity indexed fully to inflation.
- Run the ESPlanner reports with no Canadian taxes. Copy the non-asset income and retirement account withdrawals for each person from the spreadsheet and apply Canadian taxes to it at regular rates. Copy the regular asset income from the spreadsheet and apply a rate appropriate for your asset mix (interest, dividend and capital gains... here I am conservative and use the tax rate for interest, since it is the highest). You may want to tax only 85% of your Social Security benefits at this point (I don't since I want easier calculations). Finally, take the Canadian tax amount you calculated for each year and put it into ESPlanner as special expenditures. Run the ESPlanner reports to get your results including Canadian taxes.

2. Canadians in the US
- Enter CPP benefits as described above.
- Enter OAS benefits as described above.
- Let ESPlanner calculate your US taxes and social security benefits. The Social Security calculation engine will take into account your CPP benefit and adjust for the Windfall Elimination Provision.


----------



## steve41

Arrgghh. The issue of tax is much too important to approximate it this way. Canadian taxation involves too much uniqueness.... OAS clawback, EI&CPP withholding, dividend tax credit rules (prov&fed), age credits, levies, indexed brackets, GIS clawback, charitable deduction math....


----------



## brad

True, although there are so many approximations involved in retirement planning that sometimes I wonder if it's worth the effort.

For example, you have to estimate future inflation. How can you do that with any degree of accuracy? And of course you also have to make assumptions about the future rates of return on your various investments.

Really what we're doing in retirement planning is projecting scenarios based on a set of assumptions. If our assumptions are wrong, the scenario won't play out. You could perform sensitivity analyses to see what variables will rock the boat the most.


----------



## steve41

I guess that's why they call it 'planning'. My approach is to start with the known parameters (rules of taxation, clawbacks, rrif minimums, LIF/RRSP maximums, etc) and vary external parameters such as rates (maybe varying over time), various inflation estimates, etc.

The bottom line is that the subject should be able to run through the calculations/arithmetic (including income tax) and verify the numbers are correct. This not only validates the plan's integrity, but (if it is used by a planner) it enhances the planner's image in the eyes of his client.


----------



## brad

steve41 said:


> I guess that's why they call it 'planning'. My approach is to start with the known parameters (rules of taxation, clawbacks, rrif minimums, LIF/RRSP maximums, etc) and vary external parameters such as rates (maybe varying over time), various inflation estimates, etc.


My point is that today's known parameters are not necessarily tomorrow's: tax laws change, opportunities change (who five years ago would have predicted the availability of the TFSA?), etc.

If you incorporate all the details you mentioned ("OAS clawback, EI&CPP withholding, dividend tax credit rules (prov&fed), age credits, levies, indexed brackets, GIS clawback, charitable deduction math") into a retirement planner, you run the risk of creating an illusion of accuracy based on precision. The probability of a given projection matching future reality is pretty slim, and I wonder if it's worth the effort to get down to that level of detail -- it gives people a false sense of control and security.

I wonder if a better approach would be to focus on increasing resilience: making sure you have enough of a nest egg, diversified enough to spread your risk, so you can handle pretty much anything the world throws at you? It's kind of a throwback to the simple "save as much as you can" approach, which creates the risk that you'll save too much and deny yourself a better life during your working years, but it might be the most effective strategy in the end.


----------



## MoneyGal

Great post, Brad.


----------



## steve41

You are right of course. Most individuals aren't as anxious about accuracy as I would hope. Enough are, so it keeps me in beer. As far as tax changes down the road... this happens, but it is not as unpredictable as you might think. I have taken old versions of the program and forecasted based on setting the clock back 5 years. You would be surprised how consistent the plan is. Guessing the future behaviour of tax or CPP is not the same as guessing the behaviour of Nortel say.

Also, there are some decisions in which tax takes a major role... opting to melt down the RRSP, pay off loan vs RRSP, SM, .... the effect of tax on estate planning, etc.

Accuracy or approximation.... pick your poison.


----------



## brad

steve41 said:


> Also, there are some decisions in which tax takes a major role... opting to melt down the RRSP, pay off loan vs RRSP, SM, .... the effect of tax on estate planning, etc.


That makes sense to me, and these are definitely important considerations in retirement planning. And it also makes sense that tax policy is relatively stable and probably something you can safely assume will not deviate in any enormous ways from the way things are today.

All of this is interesting to me because it has parallels with an issue I'm getting more and more involved in at work: adaptation to climate change. We know there will be some climate change in the future (despite what you may hear in the news, the basic science hasn't been affected by ClimateGate or the recent findings of errors by the IPCC -- you could throw out all the work of the IPCC and even throw out the entire historical temperature record and there's still plenty of strong evidence that the climate is changing and humans are one of the causes), but we don't know how quickly it will change or by how much. This makes planning difficult: if a 100-year storm washes out a town's culverts, do you replace them with same-size culverts or do you size them up to account for more frequent and intense floods in the future? And if you size them up, by how much?

A lot of the work on reducing vulnerability to climate change has begun to focus on this concept of resilience: of making sure our infrastructure and systems are adaptable and robust so they can withstand a range of possible impacts. It seems like there are parallels with retirement planning, because both involve an uncertain future, and both involve scenarios in which the initial assumptions can have a big impact on the final results. Sensitivity analysis helps reveal which of these assumptions have the largest effects, which helps your planning to a certain extent, since it shows you which factors you can effectively ignore because they don't make much difference.


----------



## MoneyGal

Oooh, I like this discussion. "Resilience" is a great way to think about retirement planning. I wonder, though, whether "sustainability" is a better concept. 

That is, in retirement I think we aren't concerned so much about the capacity to "bounce back" (resiliency) - I think that's more of a portfolio construction concept. 

I think the issue is more one of providing income from your resources for as long as required. The defining requirement may not be resilience but sustainability - i.e., the capacity of the portfolio or resources to endure over time (when your period is stochastic, that is, random and unknown).


----------



## brad

MoneyGal said:


> The defining requirement may not be resilience but sustainability - i.e., the capacity of the portfolio or resources to endure over time (when your period is stochastic, that is, random and unknown).


Yes, but there's also the big question of "how much do I need?" And for that I think the issues that steve41 brings up are important. If you don't account properly for taxes and other expenses, you might underestimate how much you will need to sustain your desired standard of living during retirement.

This is where I think Koltikoff's approach is interesting because he tries to get you to define your lifestyle and then work back from there to figure out what you'll need to sustain it both now and during your retirement years. I'm just not sure how reliable it can be given the uncertainties.


----------



## steve41

What is unspoken here is that when things change (markets plunge, new products or tax rules change), you roll up your sleeves and re-enter the new numbers in the revised model. Then subject the projection to a hi-med-lo rate assumption, MC it, change the CPI assumption, etc. As I said that's why it is called planning... you revisit the model many, many times throughout your pre and post retirement lifetime.

BTW, the tax computation is quite easy to keep current. The feds issue a document twice a year with all the tax parameters, published expressly for programmers... mainly payroll programmers. It takes me an hour tops to update the tax module, Many still prepare their taxes manually... the calculation is not that tricky.


----------



## fraser

I use a program called Retireware. It looks at my situation and my spouse's individually and collectively. It is a Canadian program. I started using it as a backup or a second opinion to the spreadsheet that my bank's financial advisor (who I subsequently dumped in favour of someone who put my interests ahead of the bank's) had completed for me. I wanted a 'live' spreadsheet that I could do what ifs on and I wanted a check on the advisor's work. Since that time I have had another one done by by new advisor. Fortunately, the results are in the same ballpark. I have recently been retired early. I was expecting this and wanted to ensure that my calculation-current and future, were accurate. This process also led me to audit my account in my employers DB plan...the matching contribution components. The company I worked for had gone through three mergers. I found that the company match had not been credited to my account during several years. The audit took me one hour. After nine months of discussion, the company ageed to re pay just under $10K into my plan to offset this error. . It pays to understand and to audit these things.


----------



## steve41

The spreadsheet seems to be the most natural tool to use for planning. Anyone with the slightest computer proficiency will at one time or another use or build their own spreadsheet to track expenses and/or assets.

The natural progression is to graduate to forecasting cash flows.... after all, loan, annuity, PV functions are part of the spreadsheet toolkit.

The difficulty is that as soon as the ss programmer gets to 'goal-seeking' (the die-broke problem is only one simple example of goal-seeking in a PF Plan), he will soon come up against a significant barrier.... spreadsheets simply do not handle complex, nested goal seeking logic.... they are very inefficient number crunchers. Spreadsheets are generally designed to perform a top-down, one-pass calculation. As soon as you attempt to iteratively or recursively goal-seek, spreadsheets simply can't perform.

Tax is another goal-seeking problem.... how much do I need to draw from my RRSP in order to deliver a desired aftertax income? (remember, that tax calculation has to include the effect of not just the RRSP/RRIF withdrawal.... there are a ton of other taxable income components and deductions involved.

The other important part of the problem is that separate financial planning components such as loans, annuities, RESPs, real estate, pensions, etc.... can't be looked at in a vacuum.... they must be incorporated in a single model. Issues such as _'should I pay down my loan, or contribute to my RRSP?'_ are meaningless unless the model incorporates all the cash flows. Inclusiveness is a important feature, especially the effect of income tax, when forecasting your financial future.


Here is a good description of the goal-seeking (needs-based) cash flow model. Cash Flow Financial Planning Software


----------



## Banker4008

*Commuted Pension Value*

I'm looking for a good retirement calculator / worksheet that will enable a comparison between a defined benefit plan vs. a commuted pension payout and transfer to LIRA - which one has more value? I'd like to provide inputs... Commuted value vs. monthly payment, i%, number of periods, length of time to retirement, etc. If anyone knows of a good website can you post it. Thanks!


----------



## Brian Weatherdon CFP

Unmentioned above is Naviplan, which I use for every client. 

Add to this however, I like to doodle with financial calculator and graph paper -- shall I say "long hand". 

Nearing or in retirement I test three interest rate assumptions, against at least 3 periods in which I assume changing income needs. 

Result: when we do (or update) this I can print the Naviplan analysis and also confidently show the RANGE within which one may find their retirement income....over three periods of early living, mid-coasting, and later-frailty.

I doubt the computer has been created that could manage this without some human mental doodling. And one Naviplan's shortfalls; it doesn't yet know about tfsa accounts.

Cheers! Thanks for sharing--I love learning from you.
Brian


----------



## steve41

Brian Weatherdon CFP said:


> Unmentioned above is Naviplan, which I use for every client.
> 
> And one Naviplan's shortfalls; it doesn't yet know about tfsa accounts.


 Oh come on! Surely Naviplan has TFSAs. I had the TFSA imbedded in RRIFmetic a month after they were announced. Also, remember Naviplan has 2 flavours.... Naviplan and Naviplan Extended. Extended treats tax in full while 'NP plain' approximates/avoids tax. Naviplan Extended is a behemouth. 
See RRFmetic FAQs


----------



## Brian Weatherdon CFP

Hi Steve. Navi extended works pretty well....yet thanks for the link to RRIFmetic -- they present well and overcome NP's evident weaknesses. Anything about RRIFmetic you're less than happy with? Clearly you've found it to be the best for you.

Brian


----------



## MoneyGal

If he didn't like it...presumably he'd change it, as he's the guy behind RRIFmetic.


----------



## steve41

Brian Weatherdon CFP said:


> Hi Steve. Navi extended works pretty well....yet thanks for the link to RRIFmetic -- they present well and overcome NP's evident weaknesses. Anything about RRIFmetic you're less than happy with? Clearly you've found it to be the best for you.
> 
> Brian


 Anything else? Well, I wished that I had priced it higher. People, once they see the price, discount its value. Oh.... and the name choice was wacky. "RRIFmetic" (rhymes with arithmetic) makes it seem like a RRIF illustrator, which it isn't. I guess I could come up with a few more regrets. 

The crazy thing is... apart from Naviplan Extended and RRIFmetic, there doesn't seem to be any other programs out there that do the 'needs-based', tax-accurate math.


----------



## Brian Weatherdon CFP

Awesome --- can't go home today without knowing I learned something! Thanks Alexandra! Thanks Steve! A smile to both of you!


----------



## Four Pillars

steve41 said:


> Anything else? *Well, I wished that I had priced it higher.* People, once they see the price, discount its value. Oh.... and the name choice was wacky. "RRIFmetic" (rhymes with arithmetic) makes it seem like a RRIF illustrator, which it isn't. I guess I could come up with a few more regrets.
> 
> The crazy thing is... apart from Naviplan Extended and RRIFmetic, there doesn't seem to be any other programs out there that do the 'needs-based', tax-accurate math.


Why don't you raise the price? (or have you already done this?)


----------



## steve41

> Why don't you raise the price? (or have you already done this?)


 I dunno. I guess I feel a bond to my existing users. I get recurring revenue every year since users want the current tax rules in place, so I get a lot of revenue over many years. Plus... and this might sound stupid... because the program is tax accurate, I don't get a lot of customer support overhead. Imagine if you had a program with badly approximated income tax (marginal/average tax, say) Your phone would be ringing off the hook with confused users whose clients wanted the tax explained to them. Customer support is a major cost component of any software enterprise. I get very little of that. Also, I don't have mouths to feed or business loans to pay off, or a payroll to meet, so I stuck to my current business model/pricing. 

Mainly though, I set my pricing 15-20 years ago to match competitors at that time and when NP and FPS hadn't yet appeared. Altho they came into the market priced way over my level... I didn't feel the need to 'up-price'. TMI?


----------



## Four Pillars

steve41 said:


> I dunno. I guess I feel a bond to my existing users. I get recurring revenue every year since users want the current tax rules in place, so I get a lot of revenue over many years. Plus... and this might sound stupid... because the program is tax accurate, I don't get a lot of customer support overhead. Imagine if you had a program with badly approximated income tax (marginal/average tax, say) Your phone would be ringing off the hook with confused users whose clients wanted the tax explained to them. Customer support is a major cost component of any software enterprise. I get very little of that. Also, I don't have mouths to feed or business loans to pay off, or a payroll to meet, so I stuck to my current business model/pricing.
> 
> Mainly though, I set my pricing 15-20 years ago to match competitors at that time and when NP and FPS hadn't yet appeared. Altho they came into the market priced way over my level... I didn't feel the need to 'up-price'. TMI?


Not TMI - I love talking/hearing about this stuff.

So do your clients buy the new version every year with updated rules? I wasn't aware of that. Actually I'm not familiar with your business at all. In that case, keeping your price reasonable makes more sense.

Maybe you could think about a 2-price model: Higher price for first time users and a lower "upgrade" price (which would be your current price) for past users.

A selling point for the higher "new user" price would be access to the lower "upgrade" price in the second year.


----------



## steve41

That is exactly the way I do it. For 'professional' users it is $379 first time, then $99 each year. For 'personal' users its $99 first time, $49 each year. It has been that way for at least a decade.


----------



## HaroldCrump

steve41 said:


> That is exactly the way I do it. For 'professional' users it is $379 first time, then $99 each year. For 'personal' users its $99 first time, $49 each year. It has been that way for at least a decade.


Wow...not even inflation adjustments.
I wish my hydro rates were like that... 

No wonder you have loyal customers....good job!


----------



## Brian Weatherdon CFP

Awesome!


----------



## cannon_fodder

Steve inspired me to create my own version using Excel. I've played around making various calculators - for my own benefit initially but I've shared them with others. This was by far the most complex and I stopped after figuring out income tax calculations for just 4 provinces. And didn't even try to put in MC.

I haven't looked at it in almost a year... because my future retirement scenario is so different I honestly don't think I need to plan the same way.

A round about way to applaud Steve for his ability to create such a financial tool for Canadians.


----------



## steve41

It turns out that income tax is pretty easy. After all, many people do their taxes by hand each year. I can remember seeing T1 calculations written in Lotus/Excel years ago. Determining the amount of tax you owe is a clerical top-down exercise.... plunk in stuff from your T4s and T5s.... simple multiplying and adding... it is fiddly, but it isn't math, it is arithmetic. For the purpose of financial planning.... determining how much to draw down (when retired) and contribute (when working), you need to drive the tax formula in reverse. To compound the complexity, you have compound interest (investment entities) which interact with income tax in vastly different ways. I look back on some of the code I built years ago, and shake my head. I know I couldn't replicate it again from scratch... this kind of coding is a young man's sport.


----------



## Ihatetaxes

Maltese said:


> I gnerally fiddle around with two calculators. They are:
> 
> The Pension Puzzle by Bruce Cohen at:
> http://www.fiscalagents.com/toolbox/cal/rrsp/pensioncalc.shtml
> 
> and The Standard Retirement Calculator at Retirement Advisor:
> https://www.retirementadvisor.ca/retadv/apps/tools/tools.jsp
> 
> The Pension Puzzle tells me I need way more money to retire. I'd be interested if others have the same results too. If not, I'm doing something wrong.


Just playing around with these old links and both still work and are good ones to try out.


----------



## Jon_Snow

Ihatetaxes said:


> Just playing around with these old links and both still work and are good ones to try out.


Yeah, I have been fiddling with every retirement calculator in creation for many years now. I guess I have liked the results they have been giving me. I've just recently given notice to my employer and in 7 weeks I will be an early retiree at 42 years old. 

For the heck of it, I just plugged my numbers into these two calculators... still good to go! :biggrin:


----------



## My Own Advisor

Great stuff Jon. You've been talking about doing this for what seems like a LOONG time now 

Happy for you! I look forward to reading about what you do in retirement and how you invest to earn the income you need to live the good life.


----------



## PrairieGal

Jon_Snow said:


> Yeah, I have been fiddling with every retirement calculator in creation for many years now. I guess I have liked the results they have been giving me. I've just recently given notice to my employer and in 7 weeks I will be an early retiree at 42 years old.
> 
> For the heck of it, I just plugged my numbers into these two calculators... still good to go! :biggrin:


Congrats!


----------



## Ihatetaxes

Jon_Snow said:


> Yeah, I have been fiddling with every retirement calculator in creation for many years now. I guess I have liked the results they have been giving me. I've just recently given notice to my employer and in 7 weeks I will be an early retiree at 42 years old.
> 
> For the heck of it, I just plugged my numbers into these two calculators... still good to go! :biggrin:


Nice! I would love to hear some of the conversations you are having with your colleagues. "Jon, I heard you resigned! What company are you going to?" "Ahhh.... I'm actually retiring." "WTF!!! Did you win the lottery!?!?" "No I just was a smart saver and investor for the past 20 years and lived well beneath my means and now I have a seven figure portfolio that will support my frugal lifestyle pretty much forever." "Wow, contrats Jon (you SOB!)".


----------



## RBull

Jon_Snow said:


> Yeah, I have been fiddling with every retirement calculator in creation for many years now. I guess I have liked the results they have been giving me. I've just recently given notice to my employer and in 7 weeks I will be an early retiree at 42 years old.
> 
> For the heck of it, I just plugged my numbers into these two calculators... still good to go! :biggrin:


Congrats! Well done. Hope you enjoy retirement as much as I do. Somehow I'm pretty sure you will. 

Is your other half going to retire as well at the same time or keep working?


----------



## RBull

Ihatetaxes said:


> Nice! I would love to hear some of the conversations you are having with your colleagues. "Jon, I heard you resigned! What company are you going to?" "Ahhh.... I'm actually retiring." "WTF!!! Did you win the lottery!?!?" "No I just was a smart saver and investor for the past 20 years and lived well beneath my means and now I have a seven figure portfolio that will support my frugal lifestyle pretty much forever." "Wow, contrats Jon (you SOB!)".



Funny, I'm not as young as Jon and when I retired 10 weeks ago strangely enough many comments were along those same lines, although my response was much more subdued.


----------



## mrPPincer

Tried out those two calulators shown above and they both say I can fully retire today :biggrin:

This was the first time I've used one of those calculators but I have been semi-retired for eleven years now and increasingly so as my employers drop off into retirement themselves (down to just three intermittent jobs now plus the odd occasional other small job, in all totalling about 65 days a year).

The available free time has benefited my portfolio enormously, and as well there is the benefit of a much lower cost of living than when I was working night and day running aroung like a headless chicken, burning gas, eating take-out etc.

I do not plan to fully retire anytime in the near future however, because although the calculators say I will never run out of money, even assuming zero gov't funding, that is based on myself being able to continue my current lifestyle of extreme frugality, and besides, who knows what the market might do over the next 50 or so years (assuming I live to a hundred, and if I do, who knows, they may have the whole age thing cured by then  ).

...and B. I'm nowhere near having the stash that Jon Snow has, most likely never will, so I guess I'll just have to keep working


----------



## Jon_Snow

It was great to wake up this morning to such nice comments... yes, my long talked about goal is just about done.

My employers were, not surprisingly, a bit shocked. Immediately they assumed I was going to another company. I just told them I felt it was time for a change. I didn't use the word "retirement" - and perhaps its not the right term. I have a litany of interests that I will now start pursuing - some of them may even bring in a bit of income now and again - though the vast majority I will do because they make me happy.

My wife will continue to work, though we don't really know how long. She loves her job and it pays a great salary and comes with a boatload of nice perks. And though our investment income is now comfortably above our spending level, every additional year she works from now on will allow us to live a higher retirement lifestyle once she joins me in ER. She likes the idea of being able to "live it up" a bit in retirement, while I am perfectly fine with how things are right now. To be honest, the fact she is going to work a bit longer is probably what gave me the final push to quit my job. To be able to pad the portfolio a bit more over the next several years is huge for me.

So yeah, I'll hang around the forums a bit and update things - though things won't really be interesting until my wife retires and we are living completely off of our investment income... this could be 5 years from now.

I am extremely confident that this next phase of my life will be quite wonderful.


----------



## My Own Advisor

I hope you continue to hang around Jon. BTW - would you like to do a guest post on my blog? I think you have a very cool story to tell. - Mark


----------



## HaroldCrump

Jon_Snow said:


> So yeah, I'll hang around the forums a bit and update things


Euphemism for _I'll hang around the forum a bit and keep rubbing it in to the rest of you stiffs_ :rolleyes2:


----------



## Beaver101

^+ 1 :worked_till_5am:


----------



## Daniel A.

Not using the word retirement is a good thing buddy because as soon as you use that word everyone or most assume to much. 

I went three years plus just doing what I wanted and in the past year have been doing a bit of work here and there, does this mean I no longer am retired not at all, just a change that is totally up to me. 

Retirement means so much to most people and their idea of what that means can be many different things.

I think in this day and age as long as one has health and ability they are free of the need to have a weekly paycheck, which is where I put myself.
I can up and change at will anytime but do have the pension to support it.

After meeting you last winter and your best half I do wish you the best !!!!!!


----------



## Jon_Snow

Crump and Beaver, I am actually very sensitive to the fact that any post I may make about my situation might be taken as "bragging". It's a big reason why I've never posted in the "Money Diary" section and have generally posted less and less about my net worth as it has grown in the last several years. In my 20's, I barely had a penny to my name, so I know how tough it might be for some to read about a guy retiring in his early 40's with net worth 70 times annual expenses. No way do I feel guilty about achieving what I have - this is a result of formulating a plan in my early 30's and sticking with it come hell or high water.

Frankly, I see myself frequenting the forum much less in the coming years, though I will likely lurk a fair bit. There is just too much great knowledge to be had here. But I do realize that as a 42 year old retiree I am a bit of an odd duck here.

I find myself posting on Early Retirement specific sites more often these days. There are actually a fair number out there who have managed to retire younger than myself with a lot more money in the bank. :eek2:

My Own Advisor: I am going to focus on getting through the next few weeks of work, then I am going to take a deep breath and reflect on my ER journey. I think an epic "How I Got Here" post may be in the offing shortly after. As an admirer of your site I'd be honoured if you wanted to post it there. We can discuss it further in the coming weeks.


----------



## Jon_Snow

Daniel A. said:


> Not using the word retirement is a good thing buddy because as soon as you use that word everyone or most assume to much.
> 
> I went three years plus just doing what I wanted and in the past year have been doing a bit of work here and there, does this mean I no longer am retired not at all, just a change that is totally up to me.
> 
> Retirement means so much to most people and their idea of what that means can be many different things.
> 
> I think in this day and age as long as one has health and ability they are free of the need to have a weekly paycheck, which is where I put myself.
> I can up and change at will anytime but do have the pension to support it.
> 
> After meeting you last winter and your best half I do wish you the best !!!!!!


Hey, nice to hear from you Dan! The only CMF member I have met IN THE FLESH!

Yeah, I am going out of my way to avoid telling people that I am RETIRED. It just proves to be too much for most people who have ingrained parameters for what that word means.

I'll be busier than ever (albeit doing things that I love that may not pay a wage) after my work career so I really can't embrace the word "retire" either - the definition of the word suggests a scaling back of activity - this will not be the case with me.


----------



## Beaver101

Jon_Snow said:


> Crump and Beaver, I am actually very sensitive to the fact that any post I may make about my situation might be taken as "bragging". It's a big reason why I've never posted in the "Money Diary" section and have generally posted less and less about my net worth as it has grown in the last several years. In my 20's, I barely had a penny to my name, so I know how tough it might be for some to read about a guy retiring in his early 40's with net worth 70 times annual expenses. No way do I feel guilty about achieving what I have - this is a result of formulating a plan in my early 30's and sticking with it come hell or high water.
> 
> Frankly, I see myself frequenting the forum much less in the coming years, though I will likely lurk a fair bit. There is just too much great knowledge to be had here. But I do realize that as a 42 year old retiree I am a bit of an odd duck here.
> 
> I find myself posting on Early Retirement specific sites more often these days. There are actually a fair number out there who have managed to retire younger than myself with a lot more money in the bank. :eek2:
> 
> .


 ... sorry, didn't mean to make you cry ... you deserve the retirement that you worked so hard for .. all the best. eaceful:


----------



## My Own Advisor

Jon_Snow said:


> My Own Advisor: I am going to focus on getting through the next few weeks of work, then I am going to take a deep breath and reflect on my ER journey. I think an epic "How I Got Here" post may be in the offing shortly after. As an admirer of your site I'd be honoured if you wanted to post it there. We can discuss it further in the coming weeks.


@Jon, totally understand, do all the deep breathing you want. You've definitely earned your FI (financial independence). The offer for the post is there, you can send me an email on my site or DM me here whenever. I think the "How I Got Here" article would be an excellent read for all. Congrats again :victorious:


----------



## dave0823

brad said:


> FYI, it looks like ESPlanner can be adapted to work in Canada and for various expatriate situations (interesting to me because I'm a dual citizen), although the approach isn't particularly elegant: here's a note I found in the help forum:
> 
> You can run ESPlanner turning off U.S. taxes and Social Security benefits. You simply specify that you live in any state in the U.S. and then go to the tax and benefits assumptions screen and specify that starting in the current year federal and state payroll and income taxes as well as Social Security benefits will be cut by 100 percent.
> 
> Having done this, you need to enter the government pension you expect to receive from your country. You can enter this pension in the pensions and annuities folder.
> 
> You also need to enter your future projected tax payments as special receipts. Alternatively, you can enter your earnings and rate of return net of taxes.
> 
> Suggestions for the following US/Canada expatriate situations:
> 
> 1. Americans in Canada
> - Disable the US tax calculations by reducing US taxes and Social Security taxes by 100%
> - If you are entitled to CPP benefits, enter CPP as a pension NOT covered by Social Security employment. This will allow you to take advantage of ESPlanner's Social Security calculation engine to determine any Social Security benefit you are eligible to receive less the Windfall Elimination Provision for CPP. Index CPP fully to inflation.
> - If you are entitled to OAS, enter OAS as an annuity indexed fully to inflation.
> - Run the ESPlanner reports with no Canadian taxes. Copy the non-asset income and retirement account withdrawals for each person from the spreadsheet and apply Canadian taxes to it at regular rates. Copy the regular asset income from the spreadsheet and apply a rate appropriate for your asset mix (interest, dividend and capital gains... here I am conservative and use the tax rate for interest, since it is the highest). You may want to tax only 85% of your Social Security benefits at this point (I don't since I want easier calculations). Finally, take the Canadian tax amount you calculated for each year and put it into ESPlanner as special expenditures. Run the ESPlanner reports to get your results including Canadian taxes.
> 
> 2. Canadians in the US
> - Enter CPP benefits as described above.
> - Enter OAS benefits as described above.
> - Let ESPlanner calculate your US taxes and social security benefits. The Social Security calculation engine will take into account your CPP benefit and adjust for the Windfall Elimination Provision.


Hi Brad,

I'm in the same situation as you and would like to discuss in more detail what you need to do in ESPlanner (to which I have) as will as RRIFmetic. Could you please PM me with your contact information?

Thanks,
Dave


----------



## striptorn

brad said:


> If it were applicable to Canadians, I would use ESPlanner:
> 
> http://www.esplanner.com/
> 
> It calculates a sustainable living standard for you, and then figures out a lifetime plan that you can follow to maintain that standard. This seems like a really smart approach to retirement planning and personal financial planning in general, but unfortunately it's oriented entirely to US customers. It would be great if someone could create a Canadian version but it probably won't happen as the potential market here is too small.



...well, time to revive this thread to point out that ESPlanner now IS available in a Canadian version, thanks to University of Calgary:
http://www.canada.esplanner.com

(I haven't tried it seriously myself yet, so can't comment on it.)


----------



## janus10

striptorn said:


> ...well, time to revive this thread to point out that ESPlanner now IS available in a Canadian version, thanks to University of Calgary:
> http://www.canada.esplanner.com
> 
> (I haven't tried it seriously myself yet, so can't comment on it.)


I tried it again and still had issues with it. The biggest was it ignored my instructions for when I wanted to retire and chose age 65 even though there wasn't a single pension, or government benefit that was going to trigger at age 65 (OAS for us is at 67 and CPP we said we would take at 60).

Instead, I created my own and use it. There could be some more improvements, but to make it tax accurate was so tedious and I stopped at only supporting 3 provinces (the ones I thought we may choose as where we retire). Now, I just keep Ontario up to date.


----------



## simplesimon

I just found Optimal Retirement Planner.

http://www.i-orp.com/

Obviously some accuracy issues, as this is US based, but I'm wondering if it gives "in the ballpark" results?

I'm still struggling with believing that my planned retirement is sustainable!

Anyway, an interesting number it provides is "total plan value", which I assume to be perhaps a Net Present Value of your savings plus income streams such as pensions?

Any thoughts?


----------



## leoc2

Here is a very good USA based one.
http://www.firecalc.com/

But I prefer Try RRIFmetic Financial Planning Software. See my signature for link.


----------



## gammj

janus10 said:


> I tried it again and still had issues with it. The biggest was it ignored my instructions for when I wanted to retire and chose age 65 even though there wasn't a single pension, or government benefit that was going to trigger at age 65 (OAS for us is at 67 and CPP we said we would take at 60).
> 
> Instead, I created my own and use it. There could be some more improvements, but to make it tax accurate was so tedious and I stopped at only supporting 3 provinces (the ones I thought we may choose as where we retire). Now, I just keep Ontario up to date.
> 
> View attachment 4074


Would you be willing to share your custom calculator at all? I'd be interested in running my own numbers through it and I'm in Ontario too so it should work for me.


----------



## janus10

simplesimon said:


> I just found Optimal Retirement Planner.
> 
> http://www.i-orp.com/
> 
> Obviously some accuracy issues, as this is US based, but I'm wondering if it gives "in the ballpark" results?
> 
> I'm still struggling with believing that my planned retirement is sustainable!
> 
> Anyway, an interesting number it provides is "total plan value", which I assume to be perhaps a Net Present Value of your savings plus income streams such as pensions?
> 
> Any thoughts?


The US centric focus is too strange for me to figure out. One of the challenging issues I've seen with almost every calculator is allowing you to begin the two government benefit streams (OAS and CPP) at completely different times of your life. For my wife and I it could be 7 years apart.


----------



## janus10

gammj said:


> Would you be willing to share your custom calculator at all? I'd be interested in running my own numbers through it and I'm in Ontario too so it should work for me.


No, sorry. I believe steve41 allows you to try out his calculator for a period of time at no cost. His has been vetted by many people with varied circumstances.


----------



## Ahii

*Retirement calculators*



411guy said:


> I tend to use 2 calculators as "sanity checks" against each other: http://www3.troweprice.com/ric/ric/public/ric.do AND http://www.firecalc.com/index.php
> 
> The former is American, but I use it with modifications that work for my circumstances. The latter I picked up at this forum actually.
> 
> I am close to retirement (within 5 years) and pretty much financially ready. I use these calculators to answer the question: what would be the lowest amount my retirement savings portfolio could fall to trigger "red flags" that I could outlive my savings? Of course you have to put in the relevant assumptions.


I am a new comer to this forum. 
I used Canada Revenue calculator . Does anyone have any comment on the software?
Thanks for your reply.


----------



## OnlyMyOpinion

Ahii,
I've used it before http://www.servicecanada.gc.ca/eng/services/pensions/cric.shtml
I think it does an ok, simplistic job. It does consider your CPP/OAS/GIS which is helpful. 
As long as you find that it has the necessary input fields for your particular situation then it is probably useful. The main shortcoming of these simple calculators is how well they accommodate your particular circumstances (sources of savings, assumed returns, key dates, etc). 
This one for example limits the amount of 'Other Savings' to $1.5MM, although you can use 'Other Income' in the next screen to add a 'Lump Sum' to get you past that limit if necessary. 
I would not rely solely the answer from any one calculator - try several, consider different scenarios, get comfortable with a 'minimum' case and a 'maximum case, etc.
Another simplistic, 'accumulation phase' on-line calculator that I have used in the past is: http://finance.yahoo.com/calculator/retirement/ret02/


----------



## Ahii

*Retirement calculator*



OnlyMyOpinion said:


> Ahii,
> I've used it before http://www.servicecanada.gc.ca/eng/services/pensions/cric.shtml
> I think it does an ok, simplistic job. It does consider your CPP/OAS/GIS which is helpful.
> As long as you find that it has the necessary input fields for your particular situation then it is probably useful. The main shortcoming of these simple calculators is how well they accommodate your particular circumstances (sources of savings, assumed returns, key dates, etc).
> This one for example limits the amount of 'Other Savings' to $1.5MM, although you can use 'Other Income' in the next screen to add a 'Lump Sum' to get you past that limit if necessary.
> I would not rely solely the answer from any one calculator - try several, consider different scenarios, get comfortable with a 'minimum' case and a 'maximum case, etc.
> Another simplistic, 'accumulation phase' on-line calculator that I have used in the past is: http://finance.yahoo.com/calculator/retirement/ret02/




Thank you for your feedback. It's very much appreciated. I will try your suggestion.


----------

