Tools - FIRECalc - A Realistic Retirement Calculator

We found this retirement calculator a great help in trying to set a goal about the money we would be needing for our retirement. Its called FIRECalc. Here is Wall Street Journal's review of FIRECalc.

Making History

To see how your retirement-spending strategy would have held up historically, check out The site's calculator will ask you to enter items such as your portfolio's value, what percentage is in stocks, how much you hope to spend each year and how long you think your retirement will last. To gauge your strategy's likely success, the calculator looks at investment returns since 1871.

But the calculator doesn't use average historical rates of return. Instead, it analyzes what would have happened if you retired in 1871, in 1872, in 1873 and so on. It then calculates how often your strategy would have panned out historically. Suppose you retired with $400,000 invested in a low-cost portfolio of 60% stocks and 40% bonds and were looking to spend $20,000 a year for the next 30 years, with your spending rising each year along with inflation. According to the calculator, that strategy would have succeeded 81.5% of the time.

What's success?

You died before your portfolio did.

  1. Clements, J - Wall Street Journal: "Online Calculators Do The Math For You."

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