Interesting.

It is a much more "optimistic" or "generous" calculator than most. That it figures on 3% inflation is worrisome. (You always read that inflation averages 3%, but it has been more like 4% in recent decades, much higher in some decades. Only by including the "great depression" era years can you get 3%). Also I wonder if Social Security will exist in its current form.

I do think it is a good exercise and a wake up call to play with calculators like that.

The best are called "Monte Carlo" simulators which figure and refigure outcomes based on complex probabilities - each year having some predictive value for figuring inflation and investment returns based on the numbers in the preceding year. It lays out every possible scenario for 2007 with probability weightings, then ditto for 2008, repeating for each weighted 2007 scenario, then 2009, etc etc. Requires some serious computation !! Gives you a final probability of your money lasting.

I used to have access to a Monte Carlo simulator through an investment, but I don't anymore. I miss it. Quicken and others can crunch an outcome with fixed inflation/return estimates. But that probability angle was pretty cool and much more sophisticated.

There's another calculator on that site where you can estimate how long you'll live. It told me I'd live to be 94 -- I don't think so!!

According to that, I'm in really good shape for retirement!

I don't feel that way though...

Like Luann, I don't feel secure about things either, even though the calculations were better than I thought they'd be. And I punched in all sorts of numbers. I feel it is rather optimistic, too. Or maybe it's just my taciturn New England yankee colors shining through. ;)

I am terribly concerned about the state of Social Security, Medicare/medicaid, too. More so for the unwillingness of the our elected officials to break the unhappy news to legions of taxpayers!

I've been posting on the MSN money boards for many years now, and they're a lot of fun. I'm regularly panned by those with much higher incomes because I perpetually espouse frugality and ask questions about "what if". It's a good site, can be "rough" but there is much to be gleaned. I often wish I could examine the balance sheets of some of the more demeaning voices over there...

Chelone, can you give a link to the MSN board? I'll go over there and take your side!

Chelone, I found the MSN boards. Threads do seem a bit more, er, blunt over there.

Oh yeah! they don't stand on formality over there, lol!

There are some major league a--holes who delight in making everyone know just how stupid they are, lol. And there are some real smarties who pull no punches, but are uniformly fair in their assessment of what someone offers.

I am one of the very few representatives of SKILLED tradesmen. I've been panned for advocating the pursuit of skilled trades, too. But I've also been one of the people who immediately asks the debt-ridden about their weekly/monthly budget. I'm one of the few who tackles seemingly overwhelming debt with simple, "easy" steps. Budget. Brown bag lunches. Cook at home, invite your friends to bring their "leftovers", too. RENT a movie! automatic fun evening with minimal expense!

It's a wonderful site, but not for the thin-skinned or those unable to compose their thoughts carefully.

As I said before, I'd love to be able scrutinize some of the more vociferous members' balance sheets. ;)

I think that I "c" some disturbers of the barnyard byproduct, here, lately.

Maybe I should get the link and meander over to msn, also - I'd probably get my ears pinned back, as well.

We could from a consortium (or something).

ole joyful

OJ, the one thing I've learned at MSN Your Money is that everyone has an opinion and opinions are just like a--holes, everyone has one! ;)

When I started posting over there (Y2K) I was absolutely cowed by the discussion of things I knew NOTHING about. So many of those people yammered on about stock trades, etc.; but over time they began to ask about how to "retire" 40-50K credit card debt. I began to be less "cowed". And I became more confident posting my "stupid", "penny pinching", "lame-ass" suggestions. In time, some seriously indebted posters cited me as inspiration for how to look at little things as a way to greater control!

I'm no longer dazzled by figures and theories. What we do here WORKS. And we're comfortable with it.

But many of the participants on that site are very savvy. And funny. And supportive.

It's a fun site!

Funny, the calculator doesn't include equity in your home, or other RE holdings for that matter. And, there's nothing about deteriorating health and subsequent costs. If I'm going to live to a ripe old age, I think I'll have substantial health care costs.

"If I'm going to live to a ripe old age, I think I'll have substantial health care costs."

In fact, about 90-95% of the most people's lifetime health care costs are paid out in the last year before death. The older you live, the more expensive that last year becomes.

sharon_sd -- Yes, when I researched long term care coverage, I learned that "healthy-wealthy-wise" folks seldom have more than a couple months to a year of need for what's covered. We self-insure and intend to stay out of the clutches of a medical system seeking to stave off the inevitable at great expense to patient and pocketbook. (Have had experience with two elderly parents.)

My wife and I are semi-retired, and we've done a lot of thinking about how much money we need. Much of that thinking has been guided by information gleaned from a website run by Paul Merriman, who is a fee-based financial adviser in the Seattle area. We are not clients of his, but we think his advice makes a lot of sense and are largely following it.

The first observation is that if you withdraw a fixed percentage of your savings each year, you will never completely run out of money! The only question is whether you will be able to keep up with inflation.

It should be clear for the long term that you will be able to keep up so long as your withdrawal rate + the inflation rate is no larger than the rate at which your investments grow.

So what are those numbers? Well, according to Merriman, a reasonably balanced portfolio (which his website defines) can be expected to grow at 8-10% per year. No promises, of course, but the average growth rate over the past 30 years or so has been about 11%, so it's not an overly optimistic assumption. Inflation has been running about 4%, so that means that you can afford to withdraw about 4-6% per year.

We tend to be financially conservative people, so we have set ourselves an annual withdrawal limit of 4%. If we can do that, then on average we hope that our savings will grow at 2-3% per year after inflation.

Of course there will be some years when it does better and others when it does worse. We figure that we can weather a 20% drop in the inflation-adjusted value, in which case we will just tighten our belts and wait for the markets to turn around. We would have gotten through the 2000-2003 crunch just fine with this strategy.

Please note: I'm not a financial advisor. I'm just telling you what we're doing with our own savings, and where we got the advice.

Here is a link that might be useful: Paul Merriman's website