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Final Verdict: Retirement Calculators Don’t Work.
4 Types of Costs.

What’s Missing? Examine Your Unpredictable, Controllable, Unavoidable, and Avoidable Retirement Costs

It seems that everyone these days wants it simple and easy,but there’s nothing easy about planning for retirement, and that’s why even the best retirement calculators fail to answer the most important question of retirement:

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7 Secrets To High Net Worth Investment Management, Estate, Tax and Financial Planning

The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.

Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.

How much money do you need before you can safely retire?

The best retirement calculators work even less well at answering that question for ultra high net worth individuals. We’ll share why in a minute.

But this is why you won’t find a retirement calculator on our site or in our sophisticated financial planning process. Because retirement is much more complicated. Pillar Wealth Management serves only high and ultra high net worth investors who have between $5 million and $500 million in liquid net worth.

Whether you work with us or someone else, instead of trusting in the best retirement calculators, a far better first step would be to get The Ultimate Guide to Choosing a Financial Advisor for Investors with $10 million to $500 Million Liquid Assets.

Or, if you’d like to talk with an expert wealth manager who understands high net worth investors and families, schedule a free introductory call with one of our founding wealth managers, Hutch Ashoo or Chris Snyder.

Now, when it comes to why the best retirement calculators fail to answer even your most basic questions at the level you need to truly make smart decisions, let’s look at all the expenses you may face as you transition into retirement.

We’re going to look at four categories of costs:

– Unavoidable costs

– Unpredictable costs

– Controllable costs

– Avoidable costs that too many investors of all ages pay

UnavoidableRetirement Costs – You Gotta Live

These are the obvious expenses. Housing, basic living expenses like food, clothing, and toilet paper, and transportation.Recurring monthly costs.

And while you do have some control over the size of these costs, you cannot avoid them altogether unless you move in with your kids rent-free and make them give you some ROI for raising them the first time around.

But then you’d be… living with your kids again. Nah.

So you will have to cover these costs.

There is some predictability to these costs, and of the four categories, they are probably the easiest ones to fit into the best retirement calculators.

Unpredictable Retirement Costs – Life Happens

No one is immune from the unexpected. These are the things that happen outside your control, and they can blow up your retirement plan in a heartbeat – even for high net worth families.

These unpredictable costs include:

– Health care and all its many frustrations

– Drug costs

– Other family member expenses

– Tragedies and losses

– Economic recessions and world events

‘Other family member expenses’ is a big one. Maybe your son runs into a debt problem because something goes wrong in his life, and he needs your help. Maybe a divorce happens somewhere in your family. Maybe someone else dies early and you have to swoop in to help.

As for economics, maybe the government really will go belly up from its Medicare and Social Security obligations when you’re 72, and the whole system undergoes major upheaval. And then there’s Covid.

Things will happen, and they will cost you. And these costs will not fit into a monthly budget or even into an expected outlay of medical expenses, which the best retirement calculators try to estimate. Any estimates of that sort are based on averages. But what’s average?

An average is simply the middle number between highs and lows (and could be median or mean). But that means someone is on the high end of that number. That someone could be you, in which case that projected average will mean precisely nothing.

Another problem with averages is that you don’t experience them as averages. You might go several yearswith almost zero medical expenses. But then one year you might need an expensive procedure with a six-figure bill. It doesn’t ‘average’ with the previous years when you get that bill. The best retirement calculators can’t account for situations like this.

Unpredictable costs are unpredictable for a reason. It is possible to plan for them to some degree, but it requires proactive wealth management. Learn more about planning for the unexpected here.

Controllable Retirement Costs – Your Quality of Life

Retirement isn’t just about surviving, holing up in the cheapest housing you can find, and hoping against hope that you aren’t counting your last pennies with years of good health still ahead of you.

Retirement is the time to bring your greatest dreams, hopes, and goals into reality. To accomplish things you’ve been working toward your whole life.

This is about much more than just money, which is all the best retirement calculators consider.

It’s also why investment performance isn’t the right metric for how well you’re doing in your retirement planning. Here are a few of the major controllable costs that the best retirement calculators usually fail to account for:

– Travel for yourself

– Travel to visit family

– Leisure and recreation

– Giving and generosity

– Family legacy – what you want to leave your heirs

– Taxes

– Investment fees

You see, these are controllable retirement costs in that you can spend anywhere from millions to nothing on them. But these also are what determine your true quality of life and legacy.

For instance, you might set a goal to visit each continent once per year. You might plan to learn a new trade or skill, but for the recreational enjoyment rather than to get a job. Something like woodworking or learning a language. You might buy an RV and drive to every state in the union over a ten year period.

On a different note, you might plan to get heavily involved in a charity, giving more than just money, but your time and expertise as well. You might take a leadership role on a board or in a church. You might want to leave your heirs enough to fully cover college costs for four kids at private schools plus buy themselves a second home.


You might spend it all in Las Vegas, leave your heirs nothing, give nothing, and go hardly anywhere.

So these are controllable costs in that the amounts and reasons to spend or not to spend are as varied as the number of people on the earth.

The best retirement calculator can’t tell you how much you can safely spend and still enjoy your retirement.

Taxes and Fees?

But what about those last two controllable costs? Taxes and investment fees don’t seem to fit on this list at first.

They do belong here, and this is why:

How much money you have to spend on the other controllable costs will depend in a large part on how much you don’t spend on controllable investment costs.

For example, suppose you have $500,000 invested with one particular money manager and another $500,000 you’re managing yourself because one of your retirement goals is to try your hand at playing the market. Now, you finally have time to do all the research, and you want to see what you can do.

Suppose your money manager is a passive manager, meaning among other things he avoids buying, selling, and trading constantly. It also means he shies away from actively managed investments.

And then there’s you, buying, selling, trading, timing the market, testing your theories and hypotheses, reading magazines and company reports, studying prospectuses, and all the rest.

Well, guess what’s going to happen?

Regardless of how well you or your passive money manager do – YOU will almost certainly be paying far more in taxes than he will.

As a result, how much more money would you have to spend on all those other controllable (and unpredictable) costs that the best retirement calculators say nothing about, if you had invested all your money using passive management principles?

If you have investable assets in the millions, the difference between these two approaches will be tens or hundreds of thousands of dollars over the course of your retirement.

We could do ananalysis of the management fees you’d pay to an active manager versus a passive manager vs a strategic management process like Pillar’s wealth managers use. See what strategic management is – talk to us.

We could do yet another analysis on the difference between cultivating your gains and losses to reduce your tax burden, verses not cultivating them.

The point is – these costs are controllable, and they add up to big numbers. They’re controllable because, with the right investment approach or wealth manager, you will pay far, far less for the same service.

And even the best retirement calculators will say little to nothing about avoidable taxes and investment fees.

If all investment approaches produced the same raw performance, the amount you’ll save in taxes and fees using the smarter approach could – by itself – pay for that big overseas travel experience you’ve been wanting to do for years.

Avoidable Retirement Costs – Stuff You Should NEVER Be Paying

We’re way past the realm of the best retirement calculators now. This isn’t about what not to buy, or anything of that sort. This is about broker commissions.

Quite simply, this is a cost you should never be paying.

Investment brokers can charge commissions for a whole host of transactions. Selling annuities, securities, wrap programs. Getting you to sign up for a target-date fund. Many big banks, investment firms, and discount brokers try to sell you products like these because the broker gets a commission every time. Here’s a look at how fees can eat away millions from your portfolio.

Broker fees have little to do with if an investment option makes sense for your retirement goals. It might. But it has much more to do with them getting a commission. It’s what the finance industry calls a conflict of interest. Yes, the broker is required to disclose all commissions in the prospectus. But come on – are you going to read that? Did you retire so you could finally have the time to read your investment prospectus?

They’re riveting reads, to be sure…

The point is – broker commissions are an entirely avoidable cost, in or before retirement. It depends completely on the wealth manager you choose to work with.

If you need more help choosing the right wealth advisor for your situation but are afraid of choosing the wrong one (as you should be, as you’ve just seen from these controllable and avoidable costs) – here’s an eBook that will help you.

It’s called The Ultimate Guide to Choosing the Best Financial Advisor for Investors with $10 Million to $500 Million in Liquid Assets.

Check it out for free by clicking below – it might help save you hundreds of thousands in pointless costs that never show up in the best retirement calculators.

Why the Best Retirement Calculators Don’t Work

We’re now ready to answer the question. Here’s the simplest way to say it:

The best retirement calculators can give you rough approximations. But although theyappear straightforward and simple, they have multiple limitations that could impact your retirement planning. 

Retirement calculators don’t work – especially for high net worth individuals – because they’re based on invalid or incomplete assumptions. Three of those wrong assumptions include:

– Assumed percentages of your current income that you’ll spend in retirement

– Assumed average rates of investment return

– Assumed future costs of retirement

Let’s look at each of these, briefly.


Who’s to say you’ll spend less in retirement than when you worked? And how are you to make this assessment while quickly filling out a retirement calculator?

Sure, your housing costs might go down if you’ve paid off your mortgage. But maybe you’ll buy a second home. And go back and look at the controllable costs up above. You might decide to pay for your grandkids’ college educations. That won’t be cheap, especially if it includes law school or medical school. But if it’s important to you, then you might be spending more, not less, at least for part of your retirement.

There’s simply no basis for assuming you’ll spend less in retirement. This denies the very nature of setting life goals and then working to achieve them. Some goals take money, and this is one reason you’ve been saving it!


Average rates of investment return mean little, but the best retirement calculators count on them. Since 1871 when the stock market officially began, there have only been six years that earned between 8% and 11%. Yet, market analysts say it has averaged 9% returns over those 146 years.

146 years of history, and in only six of those years has it actually earned the reported “average.”

How reliable or useful is that average then?

What matters to YOU is the 20, 30, or 40 years you will be spending in retirement. Assuming an average performance only guarantees one thing: An unreliable result. That average almost never actually happens.

Future Retirement Costs

Your future costs cannot be factored into the best retirement calculators because you don’t know what they’ll be.

You can predict your Unavoidable Costs to some degree. Because you have control of them, you can somewhat predict your Controllable Costs. And because you can avoid them, you can predict your Avoidable Costs.

But most retirement calculators do not factor in the Controllable Costs that high net worth families care about. They just ask how long you’ll be retired, your current income, your age, your savings, your monthly expenses, and things like that.

Likewise, they cannot incorporate Unpredictable Costs.

Even the best retirement calculators don’t work because they assume predictability and linear reality, neither of which have anything to do with the real world.

Each person’s situation is different, and generalizing the costs will be inaccurate. 

Other Limitations of Retirement Calculators

Ever tried searching for the best retirement calculators? You’ll get hundreds of results.  Unfortunately, not all calculators are created equal. Some are too simplistic and do not account for various aspects of your retirement plan. However, some are detailed and allow you to compare different scenarios and analyze more input. 

The best retirement calculators are still dependent on assumptions like estimating the inflation rates.

No one can accurately calculate inflation for a year, but retirement calculators claim to forecast inflation 20 years into the future. 

Retirement calculators assume a 3% inflation based on the previous history. Nonetheless, bank bailouts, government debt, entitlement programs, and more can have a future impact on inflation. 

Inflation is the biggest threat to retirement planning as it’s something that you have no control over and its effect is compounded over time. 

Another problem the calculators fail to account for is the error margin in the interest rate or rate of return as this can make all the difference in your calculations. 

And, life expectancy is increasing, but some retirement calculators do not account for this. And you can’t estimate longevity with any accuracy as nobody knows their death date. 

What does work?

Fiduciary, expert, conflict-free, fee-only wealth management.

For more information or to start a simple conversation with an experienced financial advisor in Sarasota, click the button below.

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