Well, I think I’ve found something that sort of fills the need I expressed in my previous entry. This calculator from Bloomberg allows for expected salary increases and by playing around with the ‘current age’ and ‘current retirement savings’ numbers, you can get an idea of what your savings would look like if you didn’t add anything for a few years, but then added a larger percentage of income. It’s not perfect, but it’s fun to plug in numbers — well, maybe it’s only fun for me, but thinking about retirement should be fun for everyone, not just the math nerds!
Best of all, this calculator factors in inflation (I always assume 4%) and percentage of current income needed at retirement. If you house is paid off and that’s where you’ll be staying, your cost of living will be far lower in retirement than it is when you’re starting out.
I also really like the option in that calculator to include social security or not. I’m not placing my bets on social security being there when I retire. I’d like to think that it will, but it’s better to assume that it won’t, and possibly have more income than expected in retirement. I’d be pretty upset if I counted on that money, and then find out I won’t be getting it, or only a percentage of it, but I’d be just fine not counting on it and then having the checks show up anyway.
I’ve also learned from my father’s experience with his own social security that it’s better to have an alternative plan when it comes to retirement income. My father retired from his government job not too long ago, and has started his own business as a contractor of sorts. His income from this second career is erratic, but it’s been enough this year that he’s not getting any social security payments right now. He was also caught in a policy that prevented him from starting his business after retirement, so he was basically forced to work another year in his government job. How’s that for a surprise–oh, hey! You have to work another year before you can retire! Fun, right?
If you plan to work in retirement, even if it will only be part time or inconsistent income from month to month, look into the details of social security sooner rather than later. It’s not some magic check that shows up at age 65 no matter what–there are income restrictions and age requirements, among other things, to think about.