Many of us will retire before paying off our mortgage and it is critical to make sure we will have enough cash to keep up with our mortgage payments in the initial years after retirement. After our mortgage is paid off, we still need to make a reasonable allowance for periodic home 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 cash from this trade 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.

MoneyBee provides the flexibility to model a wide range of real estate strategies, including future home purchases and sales. It then works out all the math automatically, and even includes a simplified, but reasonable, allowance for your capital gains tax if you choose to sell your home.

However, your salary, property taxes, personal expenses, healthcare costs, and investments will most likely all grow at different rates. The result is an unreliable calculation where you risk not being able to afford as much as you thought you would.

MoneyBee allows you to specify different inflation rates for all items that are likely to grow differently. To keep MoneyBee accessible to everyone, all inflation rates are set automatically, using research-based defaults. We explain clearly what each assumption means and how we selected its default value, so you can make any adjustments if you wish.

There are two main issues. The first one is using numbers from your Social Security statement. Your Social Security benefit is expected to grow with the additional credits you will earn in your future employment, while your Social Security statement reflects only credits you have earned to date. Using values from your Social Security statement may be appropriate only if you are just about to retire.

The second issue is far more subtle, but equally misleading and inaccurate. Even after factoring your future credits, we need to also factor projected future changes in the Average Wage Index, the Taxable Wage Base and the cost-of-living adjustments applied to your future benefits. The Social Security Administration (SSA) publishes their own assumptions about how each of these items is expected to change in the future. These assumptions are based on considerable economic research and can be expected to be reasonable. The SSA uses these assumptions in their online calculators, if you select "future (inflated) dollars". This is the appropriate number for retirement planning calculators, because everything needs to be projected with its appropriate increase rates, as we discussed in the inflation section above.

Estimating your Social Security benefit using "current dollars" may be helpful in isolation — to give us an idea of the magnitude of our future benefit. But in a retirement planning calculator, we need to be consistent and increase every piece in an appropriate and reasonable manner. Most calculators that claim that they calculate your Social Security benefit from scratch, use a "current dollars" approach, resulting in a benefit estimate that can be half of what it may be reasonably expected to be.

MoneyBee projects your Social Security benefits with the "intermediate" assumptions from the latest SSA Trustee's Report. In fact, apart from rounding, MoneyBee should exactly match any SSA calculator on "future (inflated) dollars" basis, if using the same pay history.

Even if your spouse didn't work a single day, he/she would still be entitled to a Social Security spousal benefit on your account, which can be nearly half of your own and will be payable on top of yours! Your spouse will also be entitled to a survivor benefit under Social Security and under any employer pension (if you are so lucky to have one).

The issue goes beyond spousal and survivor benefits. What if your spouse is working and saving for retirement as well? What if he/she plans to retire at a different time from you? And what about taxes? Most calculators completely ignore taxes (which is another major problem we discuss below), but if any allowance is made for taxes, obviously having spousal information becomes essential. The list goes on... Healthcare expenses, required minimum distributions and taxation of withdrawals from retirement accounts are all determined individually for each spouse.

Excluding your spouse from your retirement planning raises another question: Whose life expectancy do you use? Let’s say a husband is basing his retirement planning on his own life expectancy, so that there is enough money while he is alive. Women on average live five years longer than men. So if his wife is five years younger, she will outlive him by ten years. Is she supposed to spend the last ten years of her life in poverty?

To help address all of these issues, MoneyBee allows you to enter your spouse's information separately from yours and performs the appropriate calculations. For example, it automatically makes sure there will be enough money for the rest of the life of the last survivor.

Social Security benefits are taxed using different rules from regular income, at both the federal and state levels. Most states (including California) don't tax Social Security benefits at all.

State income taxes are an important consideration in choosing where to retire. Many people move out of California after retirement precisely to avoid its high income tax, which you still have to pay on your investment income and withdrawals from pre-tax accounts. Shouldn't a retirement calculator allow us to compare retiring in California versus retiring in Oregon?

And how can we not consider taxes on withdrawals from our retirement savings? The whole point of rolling over your savings to a Roth IRA is to avoid paying taxes when you pull the money out after retirement. We distinguish between pre-tax and after-tax savings exactly because of how withdrawals will be taxed in retirement.

And what if you plan to sell your home at retirement? How can we not reflect your capital gain tax (or the $500,000 deduction if married and the home was your primary residence)? And how about required minimum distribution rules? These rules may require you to withdraw (and pay tax on) more money than you need. That can have a significant negative impact on your retirement planning.

MoneyBee uses current tax rules to project your 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.

Aside from emergencies most healthcare expenses can actually be modeled quite reasonably on a long-term basis. After you retire, your healthcare expenses fall in three broad categories: health insurance before age 65 (if you retire before 65), Medicare Supplement insurance after age 65 and out-of-pocket expenses (both before and after age 65).

At the same time, there is tons of data out there to help develop a reasonable predictive model for each of these three pieces of the puzzle. The US Bureau of Labor Statistics publishes annual data on health insurance costs for those over 65 and out-of-pocket health expenses for each age group. It also tracks the medical care price inflation since 1947. The healthcare marketplaces provide annual data on benchmark premiums by age and ZIP Code, which can be a good proxy for your health insurance costs before age 65.

MoneyBee uses the appropriate current averages for you across all of these categories. Then it projects them forward with healthcare price and age inflation developed by our actuaries. Since this is all fairly complicated, our healthcare cost projections are fully automated by default — no inputs required unless you want to. For those considering retirement before age 65, MoneyBee will also estimate your health premium tax credit, which may pay most or all of your pre-65 health premiums — potentially, tens of thousands of dollars a year.

Keep in mind that we define "retirement" here as financial freedom — the ability to support ourselves without employment income. For those of us curious to know what it would take to reach financial freedom while we are still supporting our kids, a retirement calculator simply cannot ignore our child-related expenses, or their timing.

MoneyBee allows you to model each of your children separately, including how long you expect to support them. It even automatically estimates their healthcare costs. - Yep, we have a predictive model for that, too.

For example, some people have "general savings", which they use for whatever comes along and then invest any leftover cash towards retirement. Ideally, these savings should be included in your retirement planning, but guessing how much will be left for retirement can be challenging.

Wouldn't it be easier if the calculator allowed you to list all your savings and the things you plan to do with your money - like paying for college, weddings, buying a boat, or having that laser surgery you have been putting off for years?

MoneyBee automatically projects your expenses related to your home (including home purchases and sales), healthcare, taxes and dependents, and then tells you what disposable cash you will have each month under each option. In addition, it also allows you to specify an unlimited number of special events, each with its own start and end dates, and even its own inflation. Now you can have the peace of mind that your plan includes all the things you want to do, and that your retirement math is complete and accurate!

Your required retirement income will likely change over time as your circumstances change (your kids finish college, your mortgage gets paid off, Medicare kicks in, your tax situation changes, different inflation rates apply to different aspects of your life, etc.).

National studies, telling you how much you will need, are of little help too. These studies are only intended for large groups, such as creating a retirement plan for large corporations or an entire country. They are not meant for individuals because everyone's situation is so unique.

A better question to ask is how much free monthly cash you will need in retirement (in today's prices, after taxes, home-related expenses, healthcare, child-related expenses, and special events) - your disposable cash for personal and optional expenses each month.

MoneyBee lays out all your options in terms of percent of pay you save, when you retire, and what your monthly disposable cash will be.