Many Financial sites now have a retirement calculator you can supposedly use to estimate your retirement income or other retirement information. I believe that most are dangerous. Mick who is one of my valued subscribers emailed me some of his own research on retirement calculators. I thought the information very relevant to my objectives with my blog theme about protecting your nest egg in retirement.
So I ask Mick if I could put his complete email on my retirecalc blog. Luckily he said yes so here it is….
One of the things I have twigged to in my ‘hunt-n-pecking’ has been the simplistic results of online retirement calculators. This is true of both Oz and international calcs ’sponsored’ or provided by financial companies/super funds. Invariably these tend to get ‘you’ to decide/guess on future earnings rates (yeah right!), future inflation rates (yeah right!) and give out ‘average’ and ‘expected’ returns over a 30+ year period. I’d put these things in the ‘Grimm’s Fairy-tales’ - ‘another Walt Disney production’ category 
I know you have mentioned this in several posts but I thought I’d send you my favourite links regarding free retirement calculators in case you might want to focus on this aspect, they have an international applicability.
Retirement Calculators from Hell -This is a compilation of links on the early-retirement.org forum (I suspect you may be aware of this site) that points to a series of articles by William J. Bernstein on why the ’standard’ calculators are downright dangerous.
David Bates says: Anything William Bernstein writes is a “must read”. These articles are no exception.
FIRECalc - an all-round Monte-Carlo calculator that will take a range of quite specific user inputs and calculate success-probability based upon actual US stock-market data dating back to the late 1890’s. (Best-of-breed in my view)
David Bates says: FIREcalc site tells us they use historical data and doesn’t try to forecast the future. They developed the idea from the work of John Greaney at Retire Early Home Page. I would definitely use FIRECalc but would compare the results to Jim Otar’s Retirement Optimizer. I always want to compare results from reality based calculators ;0)
Sensible Pension Withdrawal - a very well written humorously slanted tutorial (for the inquisitive but ‘mathematically-challenged’ person) on Monte-Carlo retirement calculation, using variable standard deviations, etc. Kinda ugly but if you work through it it makes sense
David Bates says: I tried to get to grips with what this site is telling me but there was a lot to take in, so I cannot comment. But very interesting and well worth a look.
EasyAllocator - on the face of it this calculator is a tad ‘raw’, but it’s background workings are quite sophisticated. Requires login but does not involve subscription costs, regular email correspondence or ‘nagging’.
David Bates says: It appears to be an Asset Allocator that then lets you chose from a list of Mutual Funds and you can then do some “What if” Calculations. I’d be using the book “If It Doesn’t Go Up Don’t Buy It” by Al Thomas from his web site Mutual Fund Magic with this Calculator I think as I’d be doing my own investing.
Flexible Retirement Calculator - Another free Monte-Carlo calculator that allows a range of inputs (mainly for US-centric info but can be used by others by ignoring various input fields).
David Bates says: It looks interesting but I’m always concerned about making assumptions which this calculator uses. I’d test it against Jim Otar’s before planning my retirement with it.
It would be great if these sorts of calculators existed for Aussie’s, using our tax/Centrelink/etc info, but so far I’m not aware of any.
Of course the real key to using many of these calculators is having a very good understanding of your likely expenses in retirement, both ‘basic survival’ and anticipated discretionary (travel, entertainment, hobbies, etc.).
Cheers - Mick
I’d like to thank Mick for his great email and for allowing me to use it as a post. Finding information we can actually rely on and use to protect our nest egg is time consuming and hard. So I do appreciate being able to use other people’s hard work on my blogs.
If anyone else wants to be a guest blogger and has content that fits with my objectives of preparing Baby Boomers to protect their nest egg in retirement then please email me through my blog or my RSS fed emails. We need to build a global army of like -minded people to offset the marketing forces of the financial institutions who need our nest eggs to pay for their lifestyles.
