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Be careful with this: The projections are gross (ie not inflation-adjusted) and the advice buried in the explanatory text below does not sufficiently discuss th

Be careful with this: The projections are gross (ie not inflation-adjusted) and the advice buried in the explanatory text below does not sufficiently discuss this issue. It says you can do a "simple" calculation by applying one year's worth of inflation versus a compounded rate of return. Assuming historical inflation rates, the value of the savings it projects will be significantly eroded compared to what it shows. Edit: And as others have pointed out below, the returns assumed are unrealistically optimistic. Be warned about basing your retirement planning on this.

AustinGrandt 9y ago
I agree with this. Inflation is a huge factor and needs to be considered with any retirement calculator because you can't assume that your $100K today is worth $100K in 20 years. I actually built a calculator myself to better accommodate for inflation and have the ability to tweak the numbers just a bit more. If you're interested: https://www.financialtoolbelt.com/calculators/financial-independence-calculator/ https://www.financialtoolbelt.com/calculators/financial-inde...
- neogodless 9y ago
  Why is there a minimum amount on the field for how much you need? i.e. if I make $500k now, why am I forced to spend $100k in retirement? What if I only need to spend $50k?
  - AustinGrandt 9y ago
    I think if you look in the advanced fields you can change to how much you need in retirement to set a separate number. We auto calculate and extrapolate based on current savings rate, but a lot of people will spend much less in retirement. Just fill out the field income in retirement under advanced fields and I think that should (hopefully) be what you're looking for.
- folkhack 9y ago
  Huh. Crazy how close it is to my implementation - https://modelinvesting.com/retirement-calculator/ https://modelinvesting.com/retirement-calculator/ You have a UI bug on your tooltips on advanced fields. They show up way above where they should be =)
  - AustinGrandt 9y ago
    Awesome tool! I honestly feel like the more of these there are in the world, the better. So many opportunities to help people learn more about investing, saving, etc. I know that's a bug I need to fix, something with bootstrap. Thanks for pointing it out and hopefully will have a fix tonight!
    - folkhack 9y ago
      Thank you! I have a ton of fun doing the development for that site, calculators and all. Definitely one of my flagship products over the years, great client -> great product =)
  - asaph 9y ago
    Hey Folkhack. Nice to see you on this thread. I posted a link to my retirement calculator here too. It was always fun discussing design with you.
    - folkhack 9y ago
      Eyyy asaph - was good to see you in here too! Always down to chat design. Stop by again if you're ever in the neighborhood!
pascalxus 9y ago
yeah, 9% and 12% do seem a bit high. but, other than that, it's a good calculator and I like the idea and the interface is nice too.
teej 9y ago
Yeah, it's also using a 9% rate of return for the "conservative" scenario and 12% for aggressive. Due to the exponential nature of compound interest, just a single point of overoptimism in your real growth number leads to a massive overestimation of your results. 1.07 ^ 30 = 7.6, 1.09 ^ 30 = 13.3, and 1.12 ^ 30 = 30.0 It's baseline assumptions are way off.
- Zanni 9y ago
  Even worse, "aggressive" is being used here synonymously with "higher rate of return." The risk isn't reflected in the graph at all. Why would anyone looking at this not choose aggressive? Look how much higher the total is! Really misleading without some visual indicator that your return might actually be lower for some time horizon ...
  - OrwellianChild 9y ago
    The graph should really be cone-shaped at the far end to reflect range of risk with aggro and conservative expectations. A gradient to show high-end and low-end of returns would be visually very instructive.
- astura 9y ago
  Not only that but people change risk throughout their lifetimes with their age and life situation. You're probably going to start out very aggressive in your 20s and end up a bit more conservative by your 50s. Usually.
- shove 9y ago
  Yikes!
- allsunny 9y ago
  Double Yikes!
- hiram112 9y ago
  >it's also using a 9% rate of return for the "conservative" scenario... If 9% is good enough for most federal, state, and local pension estimates, it's good enough for us, too. /s
ptero 9y ago
Yes, sorry to say, but this is a good idea (and you see plenty of those calculators), but assumptions and findings do not make sense. Inflation for long-term projections is one of the main drivers of the final results; you cannot ignore it. It would be much better to make estimates in inflation-adjusted (today's) dollars: at least then one can relate the results to costs you see today. And even in pre-inflation dollars, average 9% return is anything but conservative. On smaller points: adding "0" as an invest monthly option would be a good idea.

AustinGrandt 9y ago

I agree with this. Inflation is a huge factor and needs to be considered with any retirement calculator because you can't assume that your $100K today is worth $100K in 20 years. I actually built a calculator myself to better accommodate for inflation and have the ability to tweak the numbers just a bit more. If you're interested: https://www.financialtoolbelt.com/calculators/financial-independence-calculator/ https://www.financialtoolbelt.com/calculators/financial-inde...

neogodless 9y ago
Why is there a minimum amount on the field for how much you need? i.e. if I make $500k now, why am I forced to spend $100k in retirement? What if I only need to spend $50k?
- AustinGrandt 9y ago
  I think if you look in the advanced fields you can change to how much you need in retirement to set a separate number. We auto calculate and extrapolate based on current savings rate, but a lot of people will spend much less in retirement. Just fill out the field income in retirement under advanced fields and I think that should (hopefully) be what you're looking for.
folkhack 9y ago
Huh. Crazy how close it is to my implementation - https://modelinvesting.com/retirement-calculator/ https://modelinvesting.com/retirement-calculator/ You have a UI bug on your tooltips on advanced fields. They show up way above where they should be =)
- AustinGrandt 9y ago
  Awesome tool! I honestly feel like the more of these there are in the world, the better. So many opportunities to help people learn more about investing, saving, etc. I know that's a bug I need to fix, something with bootstrap. Thanks for pointing it out and hopefully will have a fix tonight!
  - folkhack 9y ago
    Thank you! I have a ton of fun doing the development for that site, calculators and all. Definitely one of my flagship products over the years, great client -> great product =)
- asaph 9y ago
  Hey Folkhack. Nice to see you on this thread. I posted a link to my retirement calculator here too. It was always fun discussing design with you.
  - folkhack 9y ago
    Eyyy asaph - was good to see you in here too! Always down to chat design. Stop by again if you're ever in the neighborhood!

pascalxus 9y ago

yeah, 9% and 12% do seem a bit high. but, other than that, it's a good calculator and I like the idea and the interface is nice too.

teej 9y ago

Yeah, it's also using a 9% rate of return for the "conservative" scenario and 12% for aggressive. Due to the exponential nature of compound interest, just a single point of overoptimism in your real growth number leads to a massive overestimation of your results. 1.07 ^ 30 = 7.6, 1.09 ^ 30 = 13.3, and 1.12 ^ 30 = 30.0 It's baseline assumptions are way off.

Zanni 9y ago
Even worse, "aggressive" is being used here synonymously with "higher rate of return." The risk isn't reflected in the graph at all. Why would anyone looking at this not choose aggressive? Look how much higher the total is! Really misleading without some visual indicator that your return might actually be lower for some time horizon ...
- OrwellianChild 9y ago
  The graph should really be cone-shaped at the far end to reflect range of risk with aggro and conservative expectations. A gradient to show high-end and low-end of returns would be visually very instructive.
astura 9y ago
Not only that but people change risk throughout their lifetimes with their age and life situation. You're probably going to start out very aggressive in your 20s and end up a bit more conservative by your 50s. Usually.
shove 9y ago
Yikes!
allsunny 9y ago
Double Yikes!
hiram112 9y ago
>it's also using a 9% rate of return for the "conservative" scenario... If 9% is good enough for most federal, state, and local pension estimates, it's good enough for us, too. /s

ptero 9y ago

Yes, sorry to say, but this is a good idea (and you see plenty of those calculators), but assumptions and findings do not make sense. Inflation for long-term projections is one of the main drivers of the final results; you cannot ignore it. It would be much better to make estimates in inflation-adjusted (today's) dollars: at least then one can relate the results to costs you see today. And even in pre-inflation dollars, average 9% return is anything but conservative. On smaller points: adding "0" as an invest monthly option would be a good idea.