Do I Have Enough Money to Retire?
Compared to citizens of other countries, Americans have notoriously low savings rates outside of Social Security and company pension plans that may require employee contributions. Consequently, any retirement discussion brings up three major concerns:
- Will I have enough money to retire when I want to?
- Will I be able to maintain my desired standard of living for the rest of my life?
- Will I have financial security late in life when I need it the most?
No one has a crystal ball that can answer these questions with absolute certainty and accuracy. Most of the time the answers are based on a number of assumptions that are non-controllables. For example, you control your savings rate, but you do not control the performance of the securities markets or the solvency of Social Security system.
There are thousands of free retirement calculators on the Internet. All of them are driven by assumptions. The biggest assumption is the future performance of your assets and no calculator can accurately predict the future performance of the securities markets. Be extremely cautious of “free” calculators that are provided by companies that want to sell you investment and insurance products. They may have bad assumptions that are designed to reduce your sales resistance and help them sell investment and insurance products.
Keep it Simple (KIS)
We believe in the “keep it simple” method for retirement calculations. Because all of the results are based on assumptions a KIS method will produce just as reliable a result as more complex calculations. And, because we keep it simple, the results make more sense to investors who do not spend a lot of time thinking about retirement planning and investing.