How much should I save for retirement? When can I retire? What standard of life will I have? These are complex questions with so many moving parts - mortgages, home purchases and sales, healthcare, spouses, dependents, taxes, Social Security, employment-related benefits, one-off events. These interrelated factors are likely to be very different for each person. They also follow complex rules and unique future growth patterns.
Retirement is an important decision that should take into account all important aspects of your individual circumstances and utilize the best available models, research and practices. MoneyBee achieves that by providing detailed, reliable and accurate calculations - done behind a simple and intuitive interface.
Since we all have our own preferences as to when and how to retire, MoneyBee will identify all of your options so you can make an informed decision about what is best for you. All handled via bank-level data security for the safest and most reliable way to plan for retirement.
MoneyBee applies an appropriate inflation or growth rate to each financial aspect, including Social Security, healthcare, housing, personal and child-related expenses. All inflation rates are pre-filled with reasonable, research-based defaults and clearly explained.
Using an appropriate inflation (or growth) rate for each aspects of your financial life is key to successful retirement planning. Your salary, mortgage payments, property taxes, child-related expenses, personal expenses, Social Security benefits, healthcare costs, and investments will likely all grow at different rates.
For example, projecting your savings with investment return, while keeping all your expenses in current dollars can result in running out of money much sooner than expected. Ignoring inflation in both your expenses and income won't necessarily "cancel out" either. For example, healthcare costs have been growing much faster than Social Security benefits in recent years.
To keep MoneyBee accessible to everyone, we provide reasonable defaults for each inflation and growth rate that applies to you. For each default, we explain clearly on what data and analysis it is based and let you change it if needed.
We believe that prudent retirement planning should be based on our best assumptions about the future. And since life almost never plays out exactly as planned, we need to regularly update our analysis based on our latest data. This way, we can make timely incremental adjustments along the way.
MoneyBee exactly matches the Social Security Administration's calculators on "future (inflated) dollars" basis - the appropriate basis for retirement calculators. It also automatically estimates any spousal and survivor benefits.
Accurate retirement planning requires each piece of your financial reality to be projected with an appropriate growth rate, and your Social Security benefits are no exception. Our Social Security estimates use the Social Security Administration's "intermediate" assumptions used in their own calculators. These assumptions are based on considerable economic research and can be expected to be reasonable.
MoneyBee calculates any spousal benefits, compares them to your and your spouse's earned benefits, and applies the greater of the two. For example, if your spouse has earned no Social Security benefit, he or she may still get nearly half of your benefit (while you still get 100% of your own)!
We also calculate and apply any Social Security survivor benefits. Keep in mind that women live on average 5 years longer than men. So depending on your age difference, these survivor benefits may be payable for quite a long time.
If you earned a state pension while not covered by Social Security, MoneyBee also applies the Windfall Elimination Provision and the Government Pension Offset. These adjustments further reduce your Social Security benefit and ignoring them can result in potentially dangerous overstatement of your retirement income.
MoneyBee automatically projects your healthcare costs in retirement, using data-driven predictive models for each component of these costs. You may adjust the assumptions used by these models. MoneyBee also estimates your health premium tax credit, which can make all the difference if you retire before age 65.
Healthcare is a major expense for most retirees. That's why MoneyBee models these expenses separately.
Aside from emergencies, most healthcare expenses can indeed be projected with reasonable accuracy on a long-term basis. Healthcare expenses in retirement fall in three broad categories: health insurance before age 65, Medicare Supplement insurance after age 65 and out-of-pocket expenses.
MoneyBee has a built-in predictive model for each of these three components. These models are based on the abudnant data and research available in this area. We use data from the US Bureau of Labor Statistics on health insurance costs for those over 65, out-of-pocket health expenses for each age group and historical medical care price inflation. We also collect benchmark premium data from each healthcare marketplace in the U.S. by age and ZIP Code. Our models are updated each year as new data is published.
MoneyBee models rent, mortgages, property taxes, maintenance expenses, rental income, future home purchases and sales. It even calculates a simplified, but reasonable, allowance for your capital gain tax if you plan to sell your home.
Home-related expenses are a major piece of the puzzle and everyone's circumstances and strategy are different. That's why MoneyBee allows you to model them explicitly.
Many of us will retire before paying off our mortgage and want to make sure we can keep up with our mortgage payments after we retire. After our mortgage is paid off, we still need to make a reasonable allowance for maintenance, improvements and property taxes, each increased with an appropriate inflation rate.
Some of us plan on selling our home and buying a smaller one, with the net gain added to our retirement savings. Some take a new mortgage after purchasing their retirement home. Others plan on buying a rental property to finance their retirement.
Whatever your circumstances or strategy may be, MoneyBee can provide an accurate and thoughtful projection of your related expenses and income.
MoneyBee allows you to enter your spouse's information separately from yours, including current savings, pensions, 401(k) plan, rate of saving, timing of retirement, life expectancy. It uses this information to determine your taxes, optimal withdrawal schedule, required minimum distributions, survivor benefits, healthcare costs and planning horizon.
If both you and your spouse are working and saving for retirement, MoneyBee takes into account your spouse's income, current retirement savings, percent of pay they plan to save towards retirement, their workplace retirement benefits and when they plan to retire.
We also calculate and apply any Social Security spousal benefits as well as survivor benefits under both Social Security and any employer pensions.
We determine your most tax-efficient withdrawal schedule (who draws how much from which account and when) based on your respective ages and the types of retirement accounts each of you has.
We estimate your future state and federal taxes assuming you will file jointly. This includes the large tax deduction that married couples get when selling their primary home.
We estimate your required minimum distributions and healthcare costs separately since these are age-related.
We also use your respective ages and life expectancies to adjust your planning horizon so that enough resources are available for the life of the last survivor.
MoneyBee automatically estimates your U.S. state and federal taxes in each year after retirement. While our tax projections are intentionally simplified, they do take into account all major pieces of the puzzle and should make for a reasonable tax allowance in most cases.
Taxes will continue to play an important role in your finances after you retire, even though they will likely be very different from your taxes before retirement. It is not just a matter of being in a different tax bracket. The types of taxes you pay in retirement are also very different. There's really no good substitute for directly estimating your post-retirement taxes year by year based on your individual circumstances.
And that's exactly what MoneyBee does.
Our tax estimates take into account the special rules that apply to Social Security benefits and withdrawals from retirement accounts. If your retirement strategy includes selling your primary home, we also estimate your capital gain tax. If planning to retire before Medicare kicks in, we estimate your health premium tax credit. We also estimate and apply your and your spouse's required minimum distributions.
MoneyBee also includes an estimate of your state taxes in retirement. This is particularly important if planning to retire in a high income tax state. You can also set up multiple "plans" to compare retiring in different states.
MoneyBee allows you to model your expenses for each of your children separately, including how long you expect to support them. It automatically estimates their healthcare costs too. You can also set up "events" to model one-off expenses such as college or weddings.
Most of us retire well after our kids are out of school. However, trends are shifting. Many of us have children later in life and can afford to retire relatively early.
Since MoneyBee automatically finds all possible retirement ages (and what you need to do to attain them), modeling your dependents' costs explicitly became very important in our model. It would be grossly misleading to tell you that you can retire at 55 while ignoring the fact that you'll have two kids in college at that time. Equally, we want to help our users break free from the myth that retirement before the kids are out of college (and before Medicare kicks in) is out of question. It's just a matter of doing the math right.
Events are one-off expenses or income such as your kids' college and weddings, inheritance, a new car every few years, extensive travel around the world, etc. MoneyBee allows you to specify an unlimited number of events, each with its own inflation, start and end dates.
While we strive to make MoneyBee as robust and complete as possible, we also realize that life is often bigger than any structures we try to fit it into. MoneyBee's events feature was added to help you reflect any other expenses or income that can't be fitted accurately anywhere else.
We offer a long list of examples to show you how others have used this section, but there is no limit to what you can do here.
MoneyBee doesn't ask you to guess what your total retirement income should be. Instead, it automatically calculates your monthly disposable cash in retirement after taxes and all required expenses. It also show you how your disposable cash will differ depending on what percent of pay you save for retirement and when you retire.
MoneyBee automatically evaluates all retirement options available to you. For example, one option may be to save 6% of pay each year and retire at age 65. For each option, we project all your income sources and required expenses for housing, healthcare, dependents, events, taxes. Then we figure out what "personal budget" you can enjoy each month in retirement after all required expenses are covered.
You can browse your options and choose the one that works best for you. For example, you can filter your options to show only those with retirement age 65 or under because you really don't want to keep working past that age. Or you can filter out options where your personal budget (in today's prices) is less than $2,000 a month because this is really the minimum "fun money" you can live comfortably on.
In our experience, asking people to enter their desired total income in retirement can produce very misleading results. It is much easier to make a decision about our personal budget when all income and required expenses have been properly projected and accounted for by our retirement calculator. This takes care of the most difficult and stressful part of retirement planning. MoneyBee performs millions of calculations to come up with these answers. You shouldn't have to.
* No retirement planning tool can exactly predict the future. MoneyBee allows you to update your retirement plan periodically to obtain up-to-date calculations you can rely on.
It's 100% free & safe.
We know there are so many pieces to the puzzle. It's overwhelming.
That's why we have developed a simple, easy to follow process to guide you through. First, we help you understand what data you need and where to get it. Then we piece it all together and run it through our powerful calculation engine to identify all possible paths to successful retirement. And when you choose a path, we help you manage the ups and downs of life with the same time-tested approach used by pension plans and insurance companies to manage uncertainty.
Retirement planning is about finding your perfect balance between: what percent of pay you save each year, when you can retire, and what quality of life you can enjoy in retirement.
MoneyBee calculates all possible combinations of these three basic components. We do that by carefully projecting all your benefits and required expenses. Inputs are based on current information - intuitive and well explained.
Our calculations are intentionally simplified and are based on assumptions about many uncertain future events. In doing so, we err on the side of conservatism. We encourage you to do the same when building your MoneyBee model.
As your circumstances change, you can continue to re-calibrate your MoneyBee model and make timely and gradual adjustments to your savings rate, planned retirement age or desired lifestyle in retirement. It's a long and winding road, and we're in this together.
Financial advisers are always welcome at MoneyBee. We value your expertise and appreciate your knowledge and experience, and our community does, too. We offer additional (paid) services to financial advisers to enhance your client work.
We take the security of your data very seriously. All your data is subject to a strong 256-bit encryption in transit. We use Amazon Cloud (AWS) to host our databases, which are also strongly encrypted at rest. Our servers are protected by a firewall monitored 24/7 by a top data security firm.
This case study illustrates what information you will need to enter and what your results will look like at the end.
John and Jill are a married couple living in California with their two kids. They are currently in their 40s and are both working. They hope they can retire in California, if they can afford it.
John and Jill own their home and have a few years left on their mortgage.
They plan to sell their home at retirement and downsize to a smaller one, with just 20% down. They plan to add their net gain to their retirement savings.
They won't be paying rent in retirement. They'll live full-time in their retirement home.
Here is how they set this up.
The Health section is fully automated, if you want it to be!
We look up your benchmark health premium in the city where you plan to retire (and we update it automatically each year).
We also let you set your other medical expenses to the national averages from the Bureau of Labor Statistics.
John and Jill left these defaults unchanged.
Most users skip this section because they don't expect to be supporting kids after retirement.
John and Jill set it up to be on the safe side.
On this slide, they entered the cost of having their kids live with them until they go to college.
They handled saving and paying for their kids' college in the "Events" section (coming up).
John has a pension with a prior employer. Based on his benefit statement, his pension will be $200 a month if he starts at age 65 and $280 if he starts at age 70.
Jill has a cash balance plan with her current employer, which allows her to take her entire benefit as a lump sum. She also gets benefit statements, but they reflect only service to date, while she plans to work there until retirement.
She went to her employer's online pension estimator and got her projected pension if she works until 55 and 65, respectively. She entered these numbers here.
John and Jill have also been able to set aside some retirement savings on their own.
They included their "cash savings", from which they plan to pay for their kids' college.
Note: If you plan to draw prior to retirement on any savings included here, you also need to tell us in the "Events" section when and how much you will draw. Otherwise, MoneyBee will think that all this money will be available to you when you retire!
Jim and Jill plan to save a constant $1,000 a month towards their kids' college, from now until August 2030 (when their last child starts his last year in college). This is on top of their retirement savings.
They want to pay $15,000 per year per child during each child's college years, in current prices. They expect this amount to increase with 2% inflation to the actual payment year.
They also assume that they will pay the entire $15,000 (increased with inflation) at the beginning of each school year. Their first child is expected to start her freshman year in 2022 and her senior year in 2025. Their second child is expected to start his freshman year in 2027 and his senior year in 2030.
John and Jill let MoneyBee estimate their Social Security earnings history from their current pay.
When they get their next Social Security statements, they plan to enter their complete earnings history to get a more accurate calculation.
They want to start their Social Security payments at age 70, because they can afford to wait that long.
Not all of us can.
Once they answered all the questions, MoneyBee calculated all possible combinations of:
1) what percent of pay they save each year,
2) at what age they can retire and
3) how much personal money they can enjoy in retirement.
To make it easier to browse your options, MoneyBee allows you to prioritize these three components.
John and Jill opted for saving 6% of pay, retiring when John is 65 and enjoying a monthly personal budget in retirement of $3,900 (in today's prices).
They made this their "target option".
To help you better understand each option, MoneyBee provides a detailed breakdown of what exactly you need to do this year and how the math will play out year-by-year for the rest of your life, if assumptions hold.
A hypothetical example of what your "personal budget" can afford is also provided.
MoneyBee also allows you set up multiple "plans".
In addition to the plan they just created, which they called "Retire in California", they created a backup plan - "Retire in Oregon".
All they had to do is click the "Make a Copy" button.
This creates an identical copy of all your inputs so you don't have to start from scratch.
Then in the new plan, they changed the current value of their retirement home from $600,000 to $125,000 in the "Home" section and changed their retirement state to Oregon in the "General" section.
As one can imagine, their results changed dramatically!
Based on their results, they decided they will save 6% of pay and plan to retire in California on 1/1/2037 when John is 65.
If they decide working to 65 is too long, they can retire in Oregon two years earlier when John is 63.
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