Retirement planning is a complex affair with many moving parts - mortgages, home purchases and sales, health care, significant others, 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 using best practices to model all key aspects of retirement - done behind a simple and intuitive interface.
MoneyBee applies an appropriate inflation or growth rate to each financial aspect, including Social Security, health care, 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, health care 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, health care 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 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 partner'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 enter your partner's information separately from yours, including current savings, pensions, 401(k) plans, rate of saving, timing of retirement, life expectancy, marital status. It uses this information to determine your taxes, optimal withdrawal schedule, required minimum distributions, survivor benefits, health care costs and planning horizon.
If both you and your partner are working and saving for retirement, MoneyBee takes into account your partner'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 if married, and separately otherwise. This includes the large tax deduction that married couples get when selling their primary home.
We estimate your required minimum distributions and health care 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 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 aspect of your financial life 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.
If married, 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 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 health care 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.
Health care is a major expense for most retirees. That's why MoneyBee models these expenses separately.
Aside from emergencies, most health care expenses can indeed be projected with reasonable accuracy on a long-term basis. Health care 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 health care marketplace in the U.S. by age and ZIP Code. Our models are updated each year as new data is published.
MoneyBee models your 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 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 model your expenses for each of your children separately, including how long you expect to support them. It automatically estimates their health care costs.
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 you understand what you would need to do to retire while still supporting your kids. 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 the monthly personal budget you'll be able to afford in retirement after taxes and all required expenses. It also shows you how this figure will vary based 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, it figures out your "monthly personal budget" in retirement after all required expenses (housing, health care, dependents, events and taxes) are carefully projected and covered. You can browse your options and choose the one that works best for you.
In our experience, asking people to enter their desired total income in retirement can produce very misleading results. It is much easier to decide on a desired personal budget, leaving it to the calculator to properly project and account for all income sources and required expenses. This way, the calculator 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.
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