Retirement calculators can be fun... Just enter some crazy values and you're an automatic millionaire waiting to happen, enjoying huge projected withdrawals after an early retirement.
Rarely is it that simple. Is it realistic to assume you'll make 20%/year for the next 20 years, while having no increase in underlying expenses or tax rates? Probably not.
The key to projecting accurately is to have realistic assumptions. Maybe you will make 20% in one year. But the next year could be flat (or a loss). You want to think about your *average* return over some large number of years and then use that number for the projections. 8%? 10%? these are probably more realistic over a 20 year period.
A Sampling Of Retirement Calculators
There are lots of retirement calculators available online. Almost every broker or financial web site has one. We list a few of them below. But first, a quote from Seeking Alpha:
"I wish I had started selling covered options at a much earlier stage in life, instead of just thinking about it and watching all of those premiums evaporate month after month and year after year." - George Acs, SeekingAlpha
Amen! George is a long time covered call writer and has put together a very realistic spreadsheet on planning for retirement. One of the better ones we've seen (especially since it includes collecting call premium!). You can read his philosophy on retirement calculations and download the spreadsheet for free in his article A Retirement Calculator For The Covered Option Writer. Take your time with it; it's not one of those trivial ones where you enter 4 basic parameters and click "When Do I Retire?"
Here are a few others you can experiment with:
- AARP Retirement Calculator
- CNN Money Retirement Planner
- MSN Money Plan For Your Retirement
- FINRA Retirement Calculator
- Bloomberg Retirement Calculator
But remember, garbage in leads to garbage out. Be conservative with your investment returns and aggressive with your expenses and taxes. Bottom line is there is no magic formula. You just need to save more, spend less, and invest wisely.