The Flexible Retirement Planner is a Monte Carlo Simulation calculator. It allows you a substantial amount of input into the calculator. This lets you find ways to improve your retirement plan. The calculator uses your inputs to run 10,000 market simulations to determine your retirement's probability of success.
Monte Carlo calculators are a handy tool for retirement planning. These kinds of calculators give you a clearer idea of how your portfolio will fair through all kinds of market performance. Standard retirement calculators base their results on a fixed average rate. However, market performance is not stable. You may look on track for your retirement but then hit a patch of bad years. A Monte Carlo calculator gives you a chance to improve your plan by including all types of market performance.
The Flexible Retirement Planner lets you input the usual factors: your age, retirement age, life expectancy, current amount saved/invested, income, spending and inflation. You may choose a rate of return based on set portfolios or customize it. Additional inputs allow you to change the rate of return at a set time in your plan such as when you retire. This is a nice feature to allow for change in a portfolio like when people move more into bonds when they retire.
The spending section of the calculator lets you pick a spending plan for your retirement. Perhaps you will choose to keep your spending stable or you may want to have more flexibility or be more conservative. Changing these parameters can give you a good look at how your spending may hold up in retirement.
The calculator comes with plenty of explanations, frequently asked questions and a video to explain how to use it. It may seem complex at first but in a short time you can easily learn to use it. Changing factors and rerunning scenarios is a good way to find the things you can tweak in your portfolio to improve your savings.
The calculator will give you a probability of success by percent and by a colored light diagram (red, yellow, green). These may differ in their outcomes. For example, you may have a high percent of success (say, 89%) but the light diagram shows yellow. This would mean that there is still many of the 10,000 scenarios that would turn out poorly for your plan. You may never encounter these scenarios in real life but it pays to be prepared nonetheless. After all, the financial crisis of 2008 was one such scenario.
It is better to implement small changes now then later. A little time with The Flexible Retirement Planner can point you to those small changes. Besides, it is free and fairly easy to use. Plus, it is one more tool to use in your retirement planning.
Below is the link to this free calculator:
The Flexible Retirement Planner
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