Retirement Scenarios

by Dual Income No Kids on September 9, 2008 · 0 comments


If you’re like me, you probably have tried a calculator or two to see how much you will need for retirement. If you’re like me, you’ve probably found some of this a bit difficult to work with.

The biggest issue, in my book, is that retirement calculators don’t take into account real life. They act as if you will be a work horse that continues to steadily plod along – contributing the same amount month after month, getting your annual increase, until one day you retire and eventually kick the bucket.

Reality, however, is often very different. As we all know, there may be periods of unemployment (by choice or otherwise) from one spouse or another. We are also likely to change around a bit on the job market, making salary increases less than an exact science.

Even given all of these realities, I still find it help to see if you are on the right track. If you aren’t on track it will certainly give you a reality check!

I’m in the process of changing over retirement carriers, and thus was fooling around with a few calculators recently.

The thing is, no matter what I did to bring the calculations to what seemed like a reasonable number, they almost always shot off the charts. For instance, even with having our starting salary lower than it currently is (considering that we are likely to end up in Portland where salaries are lower – and also accounting for the possibility of self-employment with some type of entrepreneurial endeavor), and putting salary increases at a mealy 3%, and saying that we would need 100% of income at retirement, and retiring later at 70 and living until a 100…

We still came out with $46 Million left over after we both kick it at 100!

The interesting thing is that almost every scenario I ran put us at having $4 Million somewhere between 58 and 62. Considering that this is the life long goal we DINKs have to reach by retirement, I found it excellent that we were so close to the mark.

While I find doing retirement calculators good in some ways, I think that at the end of the day it is best to just put away what you can now, just in case you aren’t in as good of times later. Your efforts today will have compound interest in their favor, so you are much better off to put away early.

Here are a few calculators for you to try out:

CNN, Motley Fool, Bloomberg, & MSN.

Readers: If you have one you like – please share!

Cheers,

Miel

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