So How Does A Basic Retirement Calculator Work?
February 19, 2008
And do they actually work? This article explains about the retirement calculator and points out that some of its results do not exactly mean what your financial advisor is telling you.
A basic retirement calculator is a program you can find for free on the internet that will take your current retirement savings information, let you factor in things that will affect the final number, and then tells you how much more you need to save to be able to retire at the level you want to retire at. Many people do not understand what a basic retirement calculator is telling them and they do not understand how it gets the numbers it spews back out at them. A basic retirement calculator is a guessing machine that takes current conditions, puts a huge guess for future trends on the current conditions, and then it tells you that there is no way you will be able to retire.
A basic retirement calculator works in current day dollars. So if you tell it that you want to know how much you will have to save to retire in 20 years and have the equivalent in 20 years of your current $4,000 a month lifestyle then that is what it will tell you. The basic retirement calculator will even go so far as to tell you how much per month that $4,000 in 2007 needs to be to give you an equivalent lifestyle in 2027. The whole thing is a huge guessing game and the basic retirement calculator is just a tool the financial advisor uses to scare you into giving them as much of your disposable income as you think you can part with and then some. When you look at history and the facts you may want to keep your money and live for now.
No One Knows How Money will Change
There was a major stock market crash that affected millions of people in the 1920s, the 1970s, the 1980s, and the 2000s. Millions of people lost their life savings and the first generation that tried the saving for retirement game lost everything in early 2000. To put the rise of the cost of living in real life terms a new car in 1940 cost between $600 and $700. Today, only 60 years later, that price has gone up over 2,700 percent to over $16,000 for a new car. So when you put an inflation percentage of 4 or 5 percent a year you are really not being honest with yourself. Between 1979 and 2000 the average American salary only went up by 11.5 cents per hour per year. A basic retirement calculator does not take that into account either.
Many people like to avoid reality when it comes to retirement but the fact is that the best way to save for your retirement is to invest in things that grow in value over time such as bricks and mortar and avoid things like the stock market. In fact, real estate is probably one of the best ways to save for retirement. Real estate you buy in your 40s can appreciate in value enough by your 60s to help you retire comfortably. Be smart and explore your options.
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Tags: Basic Retirement Calculator, retirement planning, Retirement Calculator
Tags: retirement planning
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