Читать книгу Personal Finance After 50 For Dummies - Eric Tyson - Страница 72

If you use a retirement calculator online, make sure you’re aware of the different assumptions used. This section details those assumptions.

In this section, we specifically look at the T. Rowe Price assumptions and online calculator. In order for you to be able to make the best use of this site, we review the following important key assumptions. If you choose not to use this online tool, you can use the discussion of the assumptions that follow for other retirement planning tools.

 Asset allocation: The calculator asks you to enter your current allocation (mix of major investment classes) and then to select an allocation for after you’re retired. For the allocation during your actual retirement, Price’s Retirement Income Calculator defaults to a fixed 40 percent stock, 40 percent bond, and 20 percent money fund. Alternatively, you can enter in your own preferred allocation in retirement. For most people, we would generally recommend something more aggressive, but presumably less aggressive than your mix during your late working years. The calculator doesn’t include real estate as a possible asset. If you own real estate as an investment, you should treat those assets as a stock-like investment when calculating your current asset allocation, because they have similar long-term risk and return characteristics. You should calculate your equity in investment real estate.

 Age of retirement: For this assumption, you plug in your preferred age of retirement, within reason, of course. (For example, plugging in age 53 is pointless if you’ve selected that age knowing that the only way to accomplish that date is by winning the lottery.) Depending on how the analysis works out, you can always go back and plug in a different age. Sometimes folks are pleasantly surprised that their combined accumulated resources provide them with a high enough standard of living that they can actually consider retiring sooner than they thought.

 Social Security: The T. Rowe Price calculator asks whether you want to include expected Social Security benefits. We’d rather that the calculator didn’t pose this question, because you definitely should include your Social Security benefits in the calculations. Don’t buy into the nonsense that the program will vaporize and leave you with little to nothing from it. For the vast majority of people, Social Security benefits are an important component of their retirement income, so do include them.Based on your current income, the T. Rowe Price retirement program will automatically plug in your estimated Social Security benefits. So long as your income hasn’t changed or won’t change dramatically, using their estimated number should be fine. Alternatively, you could input your own number using a recent Social Security benefits estimate if you have one handy. See the section, “Social Security retirement benefits” earlier in this chapter.

After you enter your personal information and decide on the preceding assumptions, you’re ready to finish the calculations on the T. Rowe Price website. Price’s completed analysis shows how much you can live on per month and then compares that with what your stated goal or amount was. The calculations include doing 1,000 market simulations, and it works 80 percent of the time. (See the nearby sidebar “Monte Carlo retirement simulations” for a more detailed explanation of this type of modeling, if you’re interested.)

The T. Rowe Price analysis allows you to make adjustments, such as your desired age of retirement, rate of savings, how much you expect to spend per month, and to what age you’d like your savings to last. So, for example, if the analysis shows that you have much more than enough to retire by age 65, try plugging in, say, age 62, and voilà, the calculator quickly shows you how the numbers change.