Thanks for the comments. Your points are well made and I need to consider them. Baby Boomers need help in finding out what we can use and trust.
I’ll go through this comment son more detail and read your eBook and respond.

David

I disagree with the premise behind the Otar retirement calculator.

It is an improvement over the 3-6-9 rule, but is dangerous nonetheless. Any backcasting simulation whether using actual data with actual sequences, hypothetical data as in some Monte Carlo, or real data randomized as in other Monte Carlo, is inherently flawed. It may sound corny, but the past is not the future, and backcasting is all about the past. Any backcasting simulation is dangerous because it appears scientific and definitive thus leading to greater confidence when in fact it is essentially meaningless.

The solution is simple. One of the most robust sets of statistics in investment returns is the inverse correlation between 10-20 year holding period returns on stocks and the market valuations at the beginning of the holding period. The lower the market valuation the higher the expected return, and vice versa.

In other words, it is far wiser to use a conventional 3-6-9 calculator and adjust your inputs for current valuations then stress test a confidence interval for a range of inflation assumptions than to assume the future has any relationship to the past. Your future investment returns have a clear relationship to current valuations but have no relationship to the past.

For example, anyone who thinks past inflation has any bearing on what we will experience over the next two decades should have their head examined. The past deceives more than illuminates.

Additionally, most people don’t retire solely on savings any longer so I believe a valid calculator should include the ability to supplement income during retirement for proper planning. I call it the New Retirement, and as you are aware, that is what I have done with the calculator on my site.

In a nutshell, be very careful of any attempt to plan retirement based on historical data. The apparent science of the process deceives more than illuminates. Instead, use current market valuations to project a range of expected returns going forward.

Hope that helps,

Todd