Some Financial Therapy clients ask for help to figure out how much they need to save for retirement. The first step is to calculate your annual expenses (noting essential-living, essential-debt, and discretionary). The next step is to use one of the retirement calculators with a Monte Carlo simulation. This helpful article describing various calculators available online.
“Online retirement calculators come in all shapes and sizes. Some programs are extremely simple. They typically provide little in the way of helpful information that you can actually use to plan for retirement. Others are complex affairs that require an advanced degree from MIT to use. What follows are 10 online retirement calculators that I believe get it just right. They are easy to use, provide a lot of useful information, and the best part is, they are all free.”
Here is an example of a calculator in the article that is offered by Fidelity:
“Fidelity’s MyPlan Retirement Quick Check is a more detailed retirement planner that uses Monte Carlo simulation to estimate how much money you will have during retirement.”
“Monte Carlo is a mathematical model which recognizes that the stock market doesn’t produce the same rate of return each year. One year it could be up 25%, the next it could be down 15%.”
“This is an extremely important consideration for new retirees.”
“If the market drops 20% in your first year of retirement, the loss can increase the odds you’ll outlive your money. Monte Carlo simulation looks at thousands of possible market returns over a period of time and produces a range of results. It then evaluates these results to determine the odds you’ll meet your retirement goals. Fidelity’s Retirement Quick Check is available to Fidelity clients or those that register with Fidelity.”
How Elaine Korngold Can Help
My professional background and my training give me a unique perspective on how money impacts individuals and couples. Frequently, it is not the lack of money that creates stress and anxiety, but how people mismanage their finances. I can help you clarify your values around money, identify the messages you received from your family, plan how to save for retirement, and understand what drives your money behaviors. For couples, I integrate Financial Therapy with Gottman Method Couples Therapy to help couples communicate more constructively and develop tactical skills to foster a healthy financial partnership.
In my private practice I encourage clients to explore how their finances affect their emotional well-being through discussions about budgets, financial values, and core beliefs about money and spending. Research indicates that good financial health is important to reducing stress and increasing stability and satisfaction. With counseling, clients can begin addressing and resolving complex issues and emotions that manifest when they encounter financial stresses.