Retirement Planning Using a Monte Carlo Calculator

At its heart, the idea of planning for retirement is very straightforward. Like squirrels in the autumn, hopeful future retirees stash away some of the nuts they gather each day so they'll be able to eat when the gathering season is past. Unfortunately, the problem is more complicated for us humans. Squirrels only need their stash to last for a few cold months of winter, while retirees depend on their stash for thirty, forty, or even fifty years. This difference can make the problem seem overwhelming, and can leave people frozen with indecision.

To make matters worse, we're inundated with conflicting advice about how we should invest our savings to best accomplish our retirement goals. Should we hire an investment advisor? Should we use index funds or actively managed funds? What funds should we buy? How do we build the very best portfolio to get the highest returns?

While these questions are valid, they become inconsequential if the apprehension they produce causes us to do nothing. What matters most is whether we save enough money for a long enough period of time and whether we make reasonably good investment choices. Notice I said reasonably good investment choices. Too many people feel that successful financial planning is about scoring frequent Jim Cramer style "booya" home-runs on brilliant stock picks. The facts just don't support this oft repeated lore. What really matters is that you have a good plan and stick to it. As a result, the focus of this guide is not on investing, but rather, it's about how to get started in building a solid retirement plan.

When can I get off the treadmill?

To determine how much you need to retire, you must first decide how much you want to spend in retirement. What standard of living do you desire in retirement and how much will it cost to fund that lifestyle? This is by far the most important question in retirement planning.