Historically, I have asked my brokerage financial advisor to do a calculation of how long my retirement funds will last. Typically, the analysis uses a Monte Carlo simulation, which is thousands for trials using random returns in random order at an expected return. The percent of successes, i.e. funds stay above zero, gives retirees an estimate of whether they have saved enough. If one wants more exact estimate, one can add Social Security payments and other sources of income, such as rents.
A couple weeks ago, I went back to an Early Retirement website I found and posted about in 2009. One of the elements on there was an early retirement calculator, Firecalc©. I briefly reviewed it initially and I like the methodology. Instead of using random ordering of annual return, it uses rolling periods of actual returns from 1871 until present to estimate how long retirement savings will last. Using actual historical data to predict possible outcomes is a great idea. Once can check whether one's savings would have passed the Great Depression and the Great Recession. This, by itself, made it a great Retirement Calculator, IMHO.
This week, I started to look at all aspects of Firecalc©. I learned it allows one to add other sources of income, including Social Security, define portfolio mix, estimate expected withdrawals, create a spending plan . Although I have not registered, I think one can create an account so that the information put in is retained for future adjustments.
Based on limited reading of the calculator instructions, I think it is a good "what if" calculator if one spends the time and effort to evaluate one's situation and options. I will definitely try this calculator going forward.
Disclaimer: I am not affiliated with and receive no compensation for any referrals to Earlyretirement.org or Firecalc© in this post or any My Wealth Builder posts.
This is not financial nor retirement advice. Please consult a professional advisor.
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