Mind Over Market

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...

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 al...

A study by the Urban Institute has found that the big stock market crash of 2008 may not seriously impair retirement incomes if equity values recover halfway by 2017. In a computer simulation of a partial recovery in equity values, the overwhelming majority of people age 43 and older will have retirement incomes no less than they would have earned if there had been no crash at all in 2008. This surprising outcome is based on the assumption that workers did not sell their equity holdings during or after the crash, continue to make the same level of contributions to retirement plans, and continue to invest in equities at a level appropriate for their age. By Robert Stowe England mindovermarket.blogspot.com June 29, 2009 In spite of the losses from the stock market crash of 2008, the overwhelming majority of people age 43 and older are unlikely to see see lower retirement income than they would have received if there had been no stock market crash at all, according to a study by the Urban...

The Department of Labor and the Securities and Exchange Commission will hold a joint one-day hearing June 18 to explore issues that have been raised about target-date funds or life-cycle funds. These are funds that allocate assets into a mix of stocks and bonds based on the age of the investor, with higher equity allocations for younger investors. The poor performance of these funds in the market crash has raised issues about their appropriateness in employer-sponsored retirement saving plans. By Robert Stowe England June 8, 2009 The Department of Labor gave its regulatory blessing to target-date or life-cycle funds in the fall of 2007 at the peak of the market, giving employers the green light to offer these funds to employees who had not made a choice among the investment options in an employer's 401(k) plan. DoL then identified target-date funds as one allowable choice for so-called qualified default investment options (or QDIA's in the lingo of the bureaucrats). For more in...