Using Retirement Calculators AND Your Advisor

Everyone is interested to know how much they need to retire.  That plays into the amount of years you need to keep slogging away at your job as well as how much fun you could be having with that yearly retirement savings contribution.  Numbers thrown around are one million, three million, or even five million dollars to comfortably retire.

Fidelity uses a rule of thumb that says at the start of retirement, you need at least 8 times your  final pre-retirement salary to last you for the next 25 years.  Therefore, for a worker whose last year’s salary is $100K, you would need at least $800,000 in savings.  Although that seems like a low amount to me, Fidelity does assume in that calculation that at age 65, you have about 55% of your assets in equities.  That might not be the case for every retiree.  Other advisors say that figure for starting savings should be more in the 11 times pre-retirement salary range.  Assuming that you now need close to $1.5M, and that you need to withdraw 75% of your salary each year, without any growth, that will only last about 20 years.  Tack on the potentially eroding inflationary factor, and your allocation becomes more and more important.  Hit a stretch during a market downturn when you need more cash, and that beginning savings pot must be bigger.

Your financial advisor can run your current assets through a thorough program, analyzing your Monte Carlo results to give you an idea of your chances of running our of retirement assets.  Moves now can really help your chances.  In the meanwhile, try using more that one of the following calculators (click on “retirement” or search for “calculators”:


Also, ask your advisor to integrate Social Security planning into your figures.  Some of these sites do not do this.  Together, with your advisor, you should be able to figure out what needs to be done now to enjoy a financially stress-free retirement.