Planning the Joint Retirement Portfolio: The Magic Number

Posted on December 28, 2006 by Him and tagged retirement

Earlier this month, I had posted about moving forward with a plan to have one retirement portfolio to rule them all. We're slowly going through all of the steps, and learning a ton along the way. Since Her just had a series, I thought I'd do my own, but not in a day-after-day format.

The first step of that plan was to see how much we would actually need in retirement to sustain our lifestyle. I really hope that when I'm 80+ years old, I'm able enough to go to some awesome summer rock festivals...

So we ran our numbers though Fidelity's retirement plan calculator for their customers (not the myPlan one, which give weird numbers when you recalculate). Here are the results:

With our current income, and adjusting for inflation and pay increases, we are estimated to need a nest egg of $5,803,405 by the time we retire.

Whoa.

With our current situation, we are on track to amass $1,740,399-$3,580,737.

Damn, we're short. Duh.

The planner runs some market simulations, and comes up with some figures for how much income we'll have in retirement, what our assets may be, and when we'll actually experience our shortfall in retirement.

Here's our projected income at retirement.

retireplan1.gif

Here's our projected assets at retirement.

retireplan2.gif

And here's the assets over time.

retireplan3.gif

We're well aware that we're short on retirement planning. We're also aware that this calculator isn't the be all end all of what our retirement planning future will bring. It is a good start though, and gives us a tangible goal to shoot for. Next step: laying out all of our retirement investments to see where we're at.

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moom | Jan 1, 2007

Are these figures in today's money or not adjusted for inflation?

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Him | Jan 2, 2007

According to the long-winded methodology of the Fidelity calculator, these numbers have been adjusted for inflation.

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moom | Feb 10, 2007

I still don't get it. You only need $1million for 4% per year withdrawals to result in $3500 per month, not the $1.75million it has in the charts.

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Him | Feb 10, 2007

You're right, moom. I wonder if the calculator assumes that I'll we'll withdraw more out each year in order to account for inflation.

Personally, I don't mind that the analyzer has told us to save so much. Instead of providing us with a pinpointed number, it has provided to us a large picture scenario and a kick in the ass.

Anyway, I'd rather watch paint dry than read over that methodology.

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