Announcement

Collapse
No announcement yet.

savings calculator?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • jacoavlu
    replied
    Spreadsheets are your friend here.

    I have a portfolio tracking spreadsheet that I update every few months, able to download data from various brokerages and manually input a few balances and gives me all my balances, allocation US/Intl/Bonds/Cash per account and overall, split into taxable, pretax, Roth, 529s.

    Another sheet pulls that current balance data and allows me to do projections as ENT doc has described, for instance I can see a projected 529 balance for a given date and return, or enter a target future balance and get a necessary monthly payment from that.

    I like to see projections of taxable, pretax, and Roth for ages 50, 60, 70. And 529s for each kid freshman year.

    Leave a comment:


  • ENT Doc
    replied
    Timely post in reference to SORR:

    https://www.bogleheads.org/forum/viewtopic.php?f=10&t=257310&newpost=4087040

    Leave a comment:


  • AlexxT
    replied
    One reason to use a savings target based on gross income rather than net, is because most of your investments will be pre-tax.  So you should calculate what your current expenses are, including taxes, and use that as your target.  It's not exact, because some of your savings will be in Roths, and your tax rate in retirement will probably be less ( but the laws may change, so again, who knows ...) but it's close enough, and if you end up with a bit extra saved, it won't be a problem.

    Keep in mind that small changes in your assumptions will lead to vastly different outcomes.

    Historic return on stock market= 10.5%.   Expected in the near future= 7%.  Bu this is just a guess.

    Inflation will knock off 2-3%.  Currently 2%.   So 7% - 2% = 5%.    So,your 6% is reasonable, but the range could be 4%-8.5%.   Or not.  So don't worry too much about the details.  It's all just a rough estimate.

    I use the investment calculator at investor.gov.  Calculator is on the upper right , under "additional resources".

     

    SORR:  Sequence of returns risk.  It means that if the stock market goes up more than expected early on, you'll come out ahead of what your plans showed, even if it corrects back down later.  BUT if it goes down early in your retirement, then you'll burn up your capital , and by the time the stock market goes back up, you won't have any money left to benefit from the subsequent rise.

    Leave a comment:


  • Dr. Mom
    replied


    but whats SORR
    Click to expand...


    Sequence of Returns Risk.  You have some reading to do on the topic.  Basically it is that if you enter retirement with a bad (think 10 year) low market return as you are withdrawing from your pot, you deplete your resources prior to the market recovery.  Then your retirement pot will not have enough in it to last your remaining years.

    Leave a comment:


  • hospitalist md
    replied
    @q-school- excuse my ignorance ...but whats SORR...

    @peds - theoretically if I tighten the belt really hard , then I can contribute 17000 a month but then the question comes , whether to invest all that in taxable or find other investment opportunities like real estate ... it scares me a little to put all that money in the market , even in index funds

    Leave a comment:


  • q-school
    replied
    to me 6% is optimistic but i recognize that historically it's not an unrealistic number.

    is SORR a concern here?

    if there is a significant correction a few years in, will that likely change the numbers?

     

    Leave a comment:


  • ENT Doc
    replied
    Indeed that was the question. :-)

    Leave a comment:


  • Peds
    replied




    Should be around $22,853.91 monthly.
    Click to expand...






    @entdoc – around 22000 was what I came up with as well.






     how much extra should I be investing every month, other than the retirement accounts mentioned above , to reach a goal of 4 million in 10 yrs with a hypothetical return of 6% .
    Click to expand...


    agree, 23K. but that is total.

    minus the 66.5K/yr you are already saving (3x 401k, 2x rIRA = 5.5K/m).

    so your answer is: 23-5.5 = 17.5K extra in taxable per month

    Leave a comment:


  • ENT Doc
    replied
    I wouldn’t just pick out random numbers. I’d make your goals purposeful, backed with sound financial analysis. The 4% initial withdrawal rule, indexed to inflation is a good starting point for a withdrawal discussion. But the expenses analysis is just as important.

    Leave a comment:


  • Dr. Mom
    replied
    Here's the one I use:

    http://www.zenwealth.com/businessfinanceonline/TVM/TVMCalculator.html

     

    Leave a comment:


  • hospitalist md
    replied
    @entdoc - around 22000 was what I came up with as well. thank you for the reply. it seems like a big number but doable when u also take retirement contributions into account. 4 million was a random number I picked out. I think I will be able to retire on that for sure. but its fun to explore these scenarios ...

     

    Leave a comment:


  • ENT Doc
    replied
    You’ll owe tax on the pre-tax accounts, sure, but you get to decide the effective tax on this by picking when you retire and withdraw. You also owe tax on the taxable account on withdrawal. The only way to avoid tax on both is to withdraw from pre-tax the standard deduction amount and then withdraw dividends and sell in taxable up to the 0% tax limit on dividends/cap gains, supplementing the remaining needs with Roth withdrawals.

    Point is, taxation is everywhere or it’s not. Depends on what funds you have, your withdrawal strategy, and your spending needs. So maybe bump up the $4M or don’t depending on what your after tax spending needs are and how you came to that $4M figure.

    BTW, you can find the payment necessary in Excel’s PMT function:

    “=PMT (rate, nper, pv, [fv], [type])”

    Where rate is 6%, nper is 10, PV is -140000, FV is 4000000, and type is 0 if the PMT is coming in at the end of the year vs 1 if at the beginning.

    More realistically, however, is that you have a monthly contribution. In that case your nper will be 120 and your rate will need to reflect the monthly rate given an APY of 6%, which is 0.004867550565343. The PMT in that situation will yield your monthly payment rather than a yearly PMT. The PV is put in as a negative because it’s money being put in (away from you), and the PMT will yield a negative number too (money being put in, away from you).

    Should be around $22,853.91 monthly.

    Leave a comment:


  • wonka31
    replied
    35% is likely a far too conservative number. Your current effective tax rate is likely far lower than this. I believe mine was 27-28% last year. If you figure out what your yearly spending will be, you can guesstimate how much of your taxable and non-taxable (likely Roth in your case) you will need to withdraw in order to meet this number. You can then add your effective tax rate based upon these numbers and current tax brackets and determine your FI/goal number.

    The only issue is if the tax brackets change for the worse, which may lead to an underestimate of your FI number. I doubt this will happen as there is no quicker way for a politician to lose their seat than to raise income taxes.

    Leave a comment:


  • hospitalist md
    replied
    @wonka- that was a helpful calculator. Thank you . The difficulty for me has been accounting for pre tax investment and the tax hit I would take from those investments upon withdrawal on retirement  and accounting for that when I calculate post tax contributions . 18500 investment in 401k is not going to be all mine on retirement .

    not sure if I will get accurate numbers of I just take out 35% from my retirement account contributions and then use the above calculator .

    Leave a comment:


  • Peds
    replied
    It's in excel.

    Leave a comment:

Working...
X