Vanguard Retirement Nest Egg Calculator

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Taylor Larimore
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Vanguard Retirement Nest Egg Calculator

Post by Taylor Larimore »

Bogleheads:

I accidently came across this Vanguard "Nest Egg Calculator" of which I was unaware. You may find it useful:

https://retirementplans.vanguard.com/VG ... ggCalc.jsf

Let us know your opinion.

Thank you and best wishes.
Taylor
Jack Bogle's Words of Wisdom: “Successful investing doesn’t require sophistication and complexity; all that’s necessary is a healthy dose of common sense.”
"Simplicity is the master key to financial success." -- Jack Bogle
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baconavocado
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Re: Vanguard Retirement Nest Egg Calculator

Post by baconavocado »

Interesting, but I'd like to see them change it so you can set the probability % and then let it calculate the annual spending to match the probability.

I actually wasn't sure what is a "safe" probability. On my first run I got 94%.
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Re: Vanguard Retirement Nest Egg Calculator

Post by Jack FFR1846 »

In my humble opinion, this is the easiest calculator I've ever used. The "explain this chart" had useful information that allowed me to understand what was going on. The 2 views were really helpful, showing both chances of success and probable savings at various numbers of years.

Thanks much for pointing this out.
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usagi
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Re: Vanguard Retirement Nest Egg Calculator

Post by usagi »

It has been out there for years, I have posted it in a few threads. One interesting thing is the answer is not static. What was a 100% success rate sometimes slips. I am not sure how often the data it draws on is updated but it seems like it changes at least twice a year. I was surprised at how hard it is to get to a 100% this time around. I played with it two days ago and could never get the probability that savings will last 30 years to 100% again. A few months ago I could.
Last edited by usagi on Thu Jan 14, 2021 1:53 pm, edited 2 times in total.
MathWizard
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Re: Vanguard Retirement Nest Egg Calculator

Post by MathWizard »

I would agree that it is easy to use, but I think that:

The "how much do you spend a year" would be better if it was
"How much do you need from this portfolio per year."

If I ignore SS benefits, there is a high failure rate. If I include them,
it is more like my own calculations, or those from i-orp.
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MinnGuyInvesting
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Re: Vanguard Retirement Nest Egg Calculator

Post by MinnGuyInvesting »

This is a cool calculator.
I like it.
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phxjcc
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Re: Vanguard Retirement Nest Egg Calculator

Post by phxjcc »

MathWizard wrote: Thu Jan 14, 2021 1:45 pm I would agree that it is easy to use, but I think that:

The "how much do you spend a year" would be better if it was
"How much do you need from this portfolio per year."

If I ignore SS benefits, there is a high failure rate. If I include them,
it is more like my own calculations, or those from i-orp.
Yup.
Had a coronary when it predicted 50%.
Realized "spend" meant "distributions from above", now 98%.
MathWizard
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Re: Vanguard Retirement Nest Egg Calculator

Post by MathWizard »

phxjcc wrote: Thu Jan 14, 2021 2:20 pm
MathWizard wrote: Thu Jan 14, 2021 1:45 pm I would agree that it is easy to use, but I think that:

The "how much do you spend a year" would be better if it was
"How much do you need from this portfolio per year."

If I ignore SS benefits, there is a high failure rate. If I include them,
it is more like my own calculations, or those from i-orp.
Yup.
Had a coronary when it predicted 50%.
Realized "spend" meant "distributions from above", now 98%.
Yeah, you and me both.
Dave55
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Re: Vanguard Retirement Nest Egg Calculator

Post by Dave55 »

Great calculator. Thanks Taylor!

Dave
runner3081
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Re: Vanguard Retirement Nest Egg Calculator

Post by runner3081 »

More discussion from a few years ago:
viewtopic.php?t=141402
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Re: Vanguard Retirement Nest Egg Calculator

Post by arcticpineapplecorp. »

Taylor Larimore wrote: Thu Jan 14, 2021 1:26 pm Bogleheads:

I accidently came across this Vanguard "Nest Egg Calculator" of which I was unaware. You may find it useful:

https://retirementplans.vanguard.com/VG ... ggCalc.jsf

Let us know your opinion.

Thank you and best wishes.
Taylor
Jack Bogle's Words of Wisdom: “Successful investing doesn’t require sophistication and complexity; all that’s necessary is a healthy dose of common sense.”
are you sure Taylor? You posted you discovered this in 2014:

viewtopic.php?t=141402

also there's a post from 2013 where someone discussed it:
viewtopic.php?t=115136

and 2010 (but no link provided!):
viewtopic.php?t=62004
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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Taylor Larimore
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Re: Vanguard Retirement Nest Egg Calculator

Post by Taylor Larimore »

runner3081 wrote: Thu Jan 14, 2021 2:34 pm More discussion from a few years ago:
viewtopic.php?t=141402
runner 3081:

I completely forgot that I first "found" this calculator seven years ago. It seems to have stood the test of time.

Thank you and best wishes.
Taylor
Jack Bogle's Words of Wisdom: “No matter what happens, stick to your program. Think long term. Patience and consistency are the most valuable assets for the intelligent investor.”
"Simplicity is the master key to financial success." -- Jack Bogle
William4589
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Re: Vanguard Retirement Nest Egg Calculator

Post by William4589 »

Thanks Taylor for finding this. It's a big help.
59Gibson
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Re: Vanguard Retirement Nest Egg Calculator

Post by 59Gibson »

phxjcc wrote: Thu Jan 14, 2021 2:20 pm
MathWizard wrote: Thu Jan 14, 2021 1:45 pm I would agree that it is easy to use, but I think that:

The "how much do you spend a year" would be better if it was
"How much do you need from this portfolio per year."

If I ignore SS benefits, there is a high failure rate. If I include them,
it is more like my own calculations, or those from i-orp.
Yup.
Had a coronary when it predicted 50%.
Realized "spend" meant "distributions from above", now 98%.
50% may be OK according to this current discussion ?
viewtopic.php?f=10&t=335948&newpost=573 ... ead#unread
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neurosphere
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Re: Vanguard Retirement Nest Egg Calculator

Post by neurosphere »

I agree this is a great calculator. Here are my opinions on some of the strengths and limitations:

Strengths:
-- Fast
-- Limited set of inputs
-- Graphs are nicely done, and the explanations are clear
-- good way for the average person to see how desired duration of spending, and stock/bond ratio can affect probabilities, e.g. good teaching tool

Weaknesses:
-- Ignores lots of variables (e.g. taxes and/or location of assets)
-- INTERNATIONAL!! As far as I can tell, they don't include international stocks in their simulation? They only use US stocks? (please correct me if i've missed something). Yet, if one were to follow Vanguards advice they could have up to 40% international in their portfolio. What happens if they were to include international in their monte carlo inputs?

I know people who will pay a financial advisor a ton of money to create fancy charts and graphs and detailed cash flow analysis based on a similar MC strategy. Ultimately, there is such wide variability in assumptions that the "professional" data is not much better than this free data. Of course, there are advisors who provide education/discussion about the data which is useful. But still.
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Re: Vanguard Retirement Nest Egg Calculator

Post by geerhardusvos »

Taylor Larimore wrote: Thu Jan 14, 2021 1:26 pm Bogleheads:

I accidently came across this Vanguard "Nest Egg Calculator" of which I was unaware. You may find it useful:

https://retirementplans.vanguard.com/VG ... ggCalc.jsf

Let us know your opinion.

Thank you and best wishes.
Taylor
It’s a decent quick one, but I prefer the below because you can add some other variables, and is pretty much as quick.

https://engaging-data.com/will-money-last-retire-early/
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StarsandStripes
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Re: Vanguard Retirement Nest Egg Calculator

Post by StarsandStripes »

Hi Taylor. Thanks for finding the calculator again. First time I have seen it. Very straight forward and easy to use. On a side note as I age I get to find many new friends and things that I had forgotten about, again. I do remember though that each day is a gift to enjoy. Best wishes sir.
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Re: Vanguard Retirement Nest Egg Calculator

Post by HippoSir »

This tool claims if I retire today (for 50+ years of retirement), at my current asset/spending level I have a good chance of ending up with billions of dollars. Doesn't seem right to me, but I hope it is! :beer
Doctor Rhythm
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Re: Vanguard Retirement Nest Egg Calculator

Post by Doctor Rhythm »

Interesting that the calculated probability of success never exceeds 99%, regardless of the inputs. Presumably at least one of the 100,000 simulations it runs is the Mad Max scenario.
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Re: Vanguard Retirement Nest Egg Calculator

Post by Thesaints »

Interesting: with a 2% withdrawal rate and a 70% stocks portfolio “probability your funds will last 0 years = 99%” !!!
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Re: Vanguard Retirement Nest Egg Calculator

Post by willthrill81 »

Doctor Rhythm wrote: Fri Jan 15, 2021 12:34 am Interesting that the calculated probability of success never exceeds 99%, regardless of the inputs. Presumably at least one of the 100,000 simulations it runs is the Mad Max scenario.
That's the problem with most Monte Carlo simulations; a significant number of the simulations just aren't credible. No withdrawal strategy is going to survive returns like those of the Great Depression followed immediately the Great Financial Crisis followed immediately by the Dot Com Bust followed immediately by stagflation, etc.

Given that the calculator forecasts only a 96% chance of 3.2% withdrawals from a 75/25 AA lasting just 30 years when a 3.25% WR would historically have lasted for any 60 year period on record, I'm not remotely interested in it.
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Re: Vanguard Retirement Nest Egg Calculator

Post by Thesaints »

I don’t think it is a montecarlo issue. Probably some bad rounding. Clearly the probability should be 100%. It is a minor issue, but it makes me wonder what the meaning of “probability it will last 49 years = 98%” is.
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Horton
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Re: Vanguard Retirement Nest Egg Calculator

Post by Horton »

There’s no ability to factor in Social Security or other changes in expenses/income. I like Fidelity’s tool a lot more if you want to use Monte Carlo from a large investment company:

https://www.fidelity.com/calculators-to ... nce-center
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Re: Vanguard Retirement Nest Egg Calculator

Post by 59Gibson »

Thesaints wrote: Fri Jan 15, 2021 12:00 pm I don’t think it is a montecarlo issue. Probably some bad rounding. Clearly the probability should be 100%. It is a minor issue, but it makes me wonder what the meaning of “probability it will last 49 years = 98%” is.
Is there really that much of a planning difference between 96, 98, 100%? After all there is the recent discovery by Kitces /Tharp article proclaiming 50% is sufficient.
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Re: Vanguard Retirement Nest Egg Calculator

Post by Dottie57 »

Horton wrote: Fri Jan 15, 2021 5:55 pm There’s no ability to factor in Social Security or other changes in expenses/income. I like Fidelity’s tool a lot more if you want to use Monte Carlo from a large investment company:

https://www.fidelity.com/calculators-to ... nce-center
I do like firecalc’s ability to modify a lot of variables.
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Re: Vanguard Retirement Nest Egg Calculator

Post by Thesaints »

59Gibson wrote: Fri Jan 15, 2021 6:10 pm
Thesaints wrote: Fri Jan 15, 2021 12:00 pm I don’t think it is a montecarlo issue. Probably some bad rounding. Clearly the probability should be 100%. It is a minor issue, but it makes me wonder what the meaning of “probability it will last 49 years = 98%” is.
Is there really that much of a planning difference between 96, 98, 100%? After all there is the recent discovery by Kitces /Tharp article proclaiming 50% is sufficient.
Yes, there is: if 99% really means 100% and 98% means 99%, the chance of failure is half of the case when 99% does mean 99% and 98% means 98%.

50% is sufficient if you are ready to lower your withdrawals by whatever it takes, which in my book goes under “failure”.
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Re: Vanguard Retirement Nest Egg Calculator

Post by flyingaway »

The problem of Monte Carlo simulations is that is very difficult to get 100% success. We have to debate what is acceptable if not 100%.
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Re: Vanguard Retirement Nest Egg Calculator

Post by abuss368 »

HippoSir wrote: Thu Jan 14, 2021 7:05 pm This tool claims if I retire today (for 50+ years of retirement), at my current asset/spending level I have a good chance of ending up with billions of dollars. Doesn't seem right to me, but I hope it is! :beer
I am going to try it! Billions?

Tony
John C. Bogle: “Simplicity is the master key to financial success."
17outs
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Re: Vanguard Retirement Nest Egg Calculator

Post by 17outs »

I wish it went longer than 50 years for the FIre crowd. I also wish it would let you simulate yearly savings amounts for a fixed time to see how it affected the outcomes. I love these calculators, but there is no need for so many if 1 would have a few basic additions.
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Re: Vanguard Retirement Nest Egg Calculator

Post by GaryA505 »

Taylor Larimore wrote: Thu Jan 14, 2021 2:58 pm
runner3081 wrote: Thu Jan 14, 2021 2:34 pm More discussion from a few years ago:
viewtopic.php?t=141402
runner 3081:

I completely forgot that I first "found" this calculator seven years ago. It seems to have stood the test of time.

Thank you and best wishes.
Taylor
Jack Bogle's Words of Wisdom: “No matter what happens, stick to your program. Think long term. Patience and consistency are the most valuable assets for the intelligent investor.”
Ha, it's better to find something twice than not at all!
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Re: Vanguard Retirement Nest Egg Calculator

Post by Thesaints »

flyingaway wrote: Fri Jan 15, 2021 8:21 pm The problem of Monte Carlo simulations is that is very difficult to get 100% success. We have to debate what is acceptable if not 100%.
There is a bug. Withdrawing 2% from a 70% stock portfolio is 100% successful on year 0.
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