Posts

Showing posts from January, 2017

Designers of Retirement Calculators Strive for Better Fidelity to Real Life

The providers of retirement calculators vie to improve the forecasting accuracy of their models

Robert Stowe England January 5, 2017
See companion article at this link
In recent years intensifying competition among providers of retirement calculators has sparked a race to build better models. The goal is to design a calculator that can forecast results that can more closely mimic actual results from real people saving for retirement.
The models, in essence, aim to raise the degree of fidelity of the model to real life. Fidelity, in this case, “is defined as the ability of a calculator to potentially produce reality,” according to retired software developer Darrow Kirkpatrick, who has published a list of The Best Retirement Calculators.
The constant testing of existing and new calculators for their strengths and weaknesses has been at the heart of the race to attain high fidelity.
Those working to build more sophisticated models, including some that now require customers to pay licen…

Why Retirement Calculators Disagree on How Much You Need to Retire

Those who have tested several calculators find different models tend to come up with different answers
By Robert Stowe England January 5, 2017

See companion article at this link.
How much money will you need to retire and live comfortably? That’s the question online retirement calculators try to answer. The answer to that question, in turn, affects how much you need to save every year and how you should invest your assets to reach your retirement goals.
Those who have tested several calculators find different models tend to come up with different answers to the same question. Some observers attribute the different outcomes to different model designs and varying assumptions about inflation and investment return, among other factors
Online retirement tools require users to submit data on annual income, annual savings, accumulated assets, and the number of years until retirement. The tools generate an estimated total savings you will need when you retire. Some also calculate how much annu…