Bengen found that 4% was the highest withdrawal rate retirees could use if they wanted their money to last at least 30 years, as the withdraw was primarily interest and dividends. The 4% stems from a 1994 study by financial planner William Bengen, who was looking for a way to help clients figure out how much they could withdraw from their retirement each year without running out of money. When in doubt, remember the 4% rule of retirement.Your life, the market and the world will continue to change, so repeat this exercise once a year, or with any major changes. Don't use the calculator once and rely on that number.Then use these scenarios to get a 360 degree view of what retirement could look like for you. Try a later retirement age, longer life span, lower / higher returns, less / more income at retirement and various inflation rates. To get a better idea of your retirement prognosis, play with the inputs to get several different scenarios. Input your information as accurately as possible, but remember that things change and we can't predict the future.Use it as a starting point to get a picture of how much you have and how much you need for retirement. How to make your retirement calculator work for you: If it tells you that you'll die with $170 million in the bank, you're probably on a good path (but continue to monitor). If your retirement calculator says that you can't retire for 112 years, then you know it's time to make some changes. The results should be seen as an estimate and starting point that shows if you're on track or not. But how you use (or misuse) the results is the key. Again, that doesn't mean retirement calculators are not valuable. Since the inputs are guaranteed to be inaccurate, it's safe to say that the results will be too. And even the smallest error on a rate of return or interest rate can make a huge different in the calculations. Who knows how long you'll live, or how much you'll spend in retirement each year? The calculator estimates the inflation and returns, but it's just that: an estimate. All the information is wrong: It's true. The calculations are dependent on pure assumptions.A few calculators I like are: NewRetirement, Vanguard, Bankrate and Fidelity. The more input the calculator analyzes, and the more freedom the tool provides to play with the numbers and compare multiple scenarios, the better. Most failed because they were too simplistic. In a recent study, researchers who tested 36 online retirement tools gave only 11 a passing grade. As you probably know in your own research, some calculators are better than others.
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