I kick off this month’s resources with a novel and useful idea that is applicable to all of us as we age and become vulnerable to cognitive decline.
We’ll take a closer look under the hood of a few of the best retirement calculators you can buy and why they may produce different outcomes given the same inputs. Resources also will highlight the uncertainty in key assumptions you have to enter into retirement calculators.
We’ll look at different strategies to determine how much you can spend in retirement and the challenges present in home and auto insurance markets. Finally, we’ll close out with a few resources to help when considering what is “enough” and finding happiness on the other side of financial independence.
Protecting Yourself from Cognitive Decline
Mike Piper provides A CPA’s Perspective on Minimizing the Financial Risk of Cognitive Decline. If you only read one thing this month, I recommend it be this.
Retirement Calculators
This month, I reviewed the Pralana Online retirement calculator. In the comments, several readers asked me to compare Pralana Online vs. Boldin, both of which we have affiliate relationships with. There are differences in the user interface and learning curve (advantage Boldin) and the level of detail with which you can model and verify inputs and outputs (advantage Pralana).
Bottom line: both are powerful financial modeling tools. If you use any high fidelity retirement calculator to do your own planning, the most important thing is to choose a tool you are reasonably comfortable with and spend time learning it inside and out.
Rob Berger produced an excellent video (below) demonstrating how you can get different, at times wildly so, results with the same inputs based on how calculators crunch the numbers you put into them.
Assumptions
In addition to differences in calculations amongst these financial models, all calculators require assumptions that can be another source of error. As the old saying goes, you know what happens when you assume.
Bill Bernstein explains Why I Don’t Use Retirement Calculators.
Allan Roth Examines Vanguard’s Forecasted Returns for the Decade Ahead.
How Much Can You Spend in Retirement?
Christene Benz explores When Safe Withdrawal Rates Collide With RMDs.
Insurance Challenges and Tips
One topic that’s captured my attention over the past few years is the challenges in the home and auto insurance markets due to a combination of high inflation and the increased frequency and severity of weather-related events.
From The Journal podcast: State Farm Cut Policies. Then the Fires Hit.
One of my fellow Abundo advisors, Maggie Klokkenga, shares five practical steps to cut your home and auto insurance costs. Number four in particular is smart and often not given enough consideration.
Beyond Dollars and Cents
As the resources above demonstrate, we focus a lot of attention on the finance part of personal finance. However, the longer I write about these topics the more convinced I become that the hard part of retirement planning is the personal side.
This month, I published a guest post from Kara Johnson highlighting the importance she found in a community that shared her interests and values and the challenges she faced on the other side of financial independence.
Jonathan Clements says one of the toughest personal finance topics to embrace can be summed up in a single word: enough. He writes Never Enough.
Arthur Brooks was recently featured in a wide-ranging conversation on the Rich Roll Podcast: Happiness is a Direction.
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Valuable Resources
- The Best Retirement Calculators can help you perform detailed retirement simulations including modeling withdrawal strategies, federal and state income taxes, healthcare expenses, and more. Can I Retire Yet? partners with two of the best.
- Monitor Your Investment Portfolio
- Sign up for a free Empower account to gain access to track your asset allocation, investment performance, individual account balances, net worth, cash flow, and investment expenses.
- Our Books
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[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. After achieving financial independence, Chris began writing about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. Chris also does financial planning with individuals and couples at Abundo Wealth, a low-cost, advice-only financial planning firm with the mission of making quality financial advice available to populations for whom it was previously inaccessible. Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He has spoken at events including the Bogleheads and the American Institute of Certified Public Accountants annual conferences. Blog inquiries can be sent to chris@caniretireyet.com. Financial planning inquiries can be sent to chris@abundowealth.com]
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