The tools I rely on for retirement planning

Retirement
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I am going to retire in 2025. Here are my picks for free retirement planning tools. Yes, free.

Flexible Retirement Planner - It’s free to individuals, but I donate a few Dollars to the author every year anyway

Fidelity Investments retirement planner - Sadly, in 2024, they decimated the reporting capabilities of this tool, though the underlying math and retirement scoring stays the same. What you have to do now is build your own report document by cutting and pasting data and images from the tool. Free for customers.

FIRECALC - A funky 1990s - Y2K web interface, but it’s pretty powerful. I also donate a few Dollars per year when I use it, but it’s free otherwise.

They all roughly agree with each other, if I am careful to set them all up with the same input data. I run them all in parallel, and go with the most cautious forecast.

Retirement planners that used to be good but got UN-improved - Schwab and Fidelity used to have equally powerful retirement planners, but Fidelity removed the reporting and Schwab just fell over. My gosh, it’s terrible compared to what it was like before.

I used to hang out on Reddit before I got perma-banned by their robot, and on r/retirement people would agonize over their decisions and they would get at times very good or very bad advice from the Chorus of Internet Strangers. Or, younger people always wonder, “How much should I save?”

There’s no need for drama. You run one or more planners, take the answer, and go with it, no matter whether you’re many years from retirement or already retired. Re-run them every year, say on your birthday, and readjust. Every year’s estimate will be “wrong”, but as retirement gets closer and closer, you will zero in on your target.

Before you know it, you’ll be thinking about how to have that, “Boss, I’m retiring in a few months” conversation, which I am planning to have soon.

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What kind of safety margin did you allow for? ie: 125% or 150% or 200% etc. of what you felt you needed as a minimum?

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In the Flexible Retirement Planner and FIRECALC, I use a 95% probability of successfully funding my retirement. I have always used 95%. That’s a pretty high bar, but it’s possible for things to get worse than 95%, and for the retiree to have to cut back or find some more income somewhere.

In Fidelity I plan for a retirement score of 120 for the “market returns significantly below average” scenario. My Advisor likes the scores to be above 100, even though 100 means “100% funded”.

Another safety margin feature in Flexible Retirement Planner and FIRECALC is to use an income rule where the retiree gets throttled back following bad market years. In the Flexible Retirement Planner there are called the “Conservative” or “Flexible” plans. In FIRECALC you can simulate Bob Clyatt’s 95% rule: “Every year, take out 4% of portfolio value, or 95% of the prior year’s distribution, whichever is greater”.

My spending budget is being created using the stable spending rules, where you just spend more every year no matter what the market is doing… but in reality, I would not do that. After a bad year, I would follow some variety of the Clyatt Rule. I would cut back or at least skip the inflation adjustment. I just would have a hard time increasing my “pay” if I took a -15% hit.