One question you must ask as you’re preparing for retirement is “How Long Will Your Retirement Savings Last?”. It’s one of the most important questions we must answer to determine when we can retire, and yet it’s a question that’s impossible to answer with certainty. Fortunately, there are some valuable tools available for free which help visualize the future and provide some answers to the question of how long will your retirement savings last. Today, we’re going to take a look at them.How Long Will Your Retirement Savings Last? That's an impossible question to answer, but today we show you some tools to help. Click To Tweet
How Long Will Your Retirement Savings Last?
Most of us know about “The 4% Rule“, and other strategies we can use to determine our Safe Withdrawal Rate. I’ve shared in Our Retirement Investment Drawdown Strategy that we’re targeting ~3% as our withdrawal rate (e.g., if we had $1M, we’d be able to withdraw $30k in Year 1 of our retirement). I’ve also encouraged you to read Big ERN’s Ultimate Guide To Safe Withdrawal Rates, the most comprehensive series I’ve ever read on the topic.
Bottom Line: There’s a lot out there on Safe Withdrawal Rates, so I’m not going to touch on it in today’s post.There's enough written about SWR's. Today's post is dedicated to sharing some free resources to visualize the future of your retirement savings. Click To Tweet
Free Tools To Visualize Your Retirement Savings
Rather than talk about the concept of Safe Withdrawal Rates, today I’m going to share some interesting tools I’ve found which help you visualize the future of your retirement savings. To me, there’s something intriguing about seeing a graph which helps answer the question of how long will your retirement savings last. These tools are in no particular order, and this is not meant to be a comprehensive review. Rather, it’s a broad post meant to show some high-level graphs available from various tools. If you see one that interests you, I encourage you to click the related link and do a deeper exploration using your base scenario. Have some fun, and help answer the question for yourself about how long will your retirement savings last.
To simplify comparison, I’m using the same base scenario in every tool:
The Base Scenario:
- Investments: $1,000,000
- Withdrawal Rate: 4% (Year 1)
- Asset Allocation: 60% Equity / 30% Bonds / 10% Cash
- Age Of Retirement: Age 60 (Year 1)
- Lifespan: Age 95
Simply click on the hyperlinked titles below to launch the corresponding tool.
I’m a big fan of Personal Capital and use it for my personal retirement planning. I like how it incorporates all of your investments, including asset location (e.g., tax-deferred, as shown above) and allows easy inputs for future events (e.g., expected inheritance). The output is based on Monte Carlo analysis and presented in high-quality and easy to understand graphics. In full transparency, I am a member of the Personal Capital affiliate program, so I’ll get a bit of $ to offset the costs of running this blog if you’d happen to click on the link above. Regardless, I am sincere when I say I’m a fan of this site, and I do use it as my main “go-to” location for my retirement and investment tracking.
When J.D. Roth says that this is his favorite retirement planning tool, I pay attention. It’s also been named a best calculator by AAII, Forbes, The Center For Retirement Research at Boston College, Can I Retire Yet and others. Those are strong endorsements, for good reason. I know the founder, Stephen Chen, and am impressed with his approach. He’s committed to creating the best retirement calculator possible and is responsive to any issues/questions raised by users. He even created the dashboard shown above based on a single email request from me, since I didn’t want to change all of the numbers in my personal dashboard for an example in this post Yes, that means I DO use this tool and have all of my numbers uploaded on his site. (BTW, I forgot to give him the $40k spending assumption, so his dashboard is based on slightly higher spending, but that doesn’t matter since I’m only showing you high-level overviews of the sites. Thanks for the quick response, Stephen!).
This is one of the easiest tools I’ve worked with for making massive customization (e.g., land a short term gig working in retirement? Easy stuff, just add “Passive Income” for the years you expect it to continue). The graphics are the best I’ve seen in a free calculator, and offer some nice features (e.g., “hover” your mouse over an item in the legend, and that part of the chart gets highlighted). A great way to get a visual answer to the question of how long will your retirement savings last.
I recently discovered the Portfolio Charts tool based on this review from My Money Blog. One of the big attractions for this tool is the ability to easily test out various withdrawal strategies, including the flexible withdrawal strategy which allows a floor/ceiling on annual spending changes. At the bottom of the model page, the site also shows settings you can apply to easily test 6 other popular withdrawal strategies. It’s easy, and interesting, to play around with various scenarios, and the output shows you how much you’re able to withdrawal each year in retirement.
Vanguard has numerous tools available on its website, the easiest of which to use is their Nest Egg calculator. I included it here primarily due to the popularity of Vanguard. In my opinion, it’s too basic a tool to be used for anything beyond a high-level comparison to the results you’re getting from other calculators. The biggest advantage is it’s simplicity, which also happens to be it’s biggest disadvantage.
The founder of Retirement Simulation reached out to me recently to make me aware of his simulator. It’s a Monte Carlo based tool with a very simple input interface and is useful for a quick calculation or to test various scenarios. The dashboard includes some handle toggles to adjust stock/bond/cash return assumptions as well as the assumed inflation rate. Data is presented in both graphical and tabular form, though the model is a bit of a “black box” with no ability to adjust inputs beyond basic levels.
The Best Retirement Calculator
If you’re interested in using graphs to help answer the question “How long will your retirement savings last”, you’re also likely a fan of retirement calculators. Clearly, there’s a lot of overlap in the topics, and I thought it would be worthwhile to share several relevant “Best Retirement Calculator” posts which I came across as I researched today’s post. Be forewarned, this rabbit hole could consume the rest of your day (I should know, I’m just coming up for air after 3 hours of chasing rabbits. It was fun…).
- The Best Retirement Calculator – The Retirement Manifesto (my post on the topic)
- 5 Excellent Retirement Calculators (And All Are Free) – Fortune
- The 10 Best Retirement Calculators – New Retirement
- The Best Retirement Calculators – Part-Time Money
Answering the question of how long will your retirement savings last is a fundamental part of retirement planning. It’s great to see the number of free resources that are available to help as you analyze your personal situation. In addition, I’ve always been a fan of spreadsheets, and encourage you to model your situation in your own spreadsheet. Building the spreadsheet is a great way to ensure you understand your financial situation in addition to the tools shared above.
What about you? Are there other tools you’ve found which could benefit the readers? Let’s share resources in the comments, for the benefit of all…