The easy guide to retirement planning in Simplifi
Planning for retirement might feel overwhelming, but Simplifi's Retirement Planner makes it easier to visualize your financial future and make informed decisions today. This guide walks you through every feature of the Retirement Planner, using Ashley's retirement scenario as a practical example.
What is the Retirement Planner?
The Retirement Planner is a powerful tool within Simplifi that helps you project your financial future and understand how your current decisions impact your retirement years. Unlike generic retirement calculators, this planner integrates with your actual Simplifi data to provide personalized projections based on your real financial situation.
The planner uses your current financial information combined with your retirement goals to create visual projections. These projections show three estimates: high, expected, and low, giving you a realistic range of possibilities. You can adjust various factors like contribution amounts, retirement age, and expected returns to see how different choices affect your long-term financial security.
Getting Started with Ashley's Example
Throughout this guide, we'll follow Ashley's retirement planning journey to make these concepts concrete and relatable. Ashley represents a typical Simplifi user who wants to take control of her retirement planning but needs guidance on using all the available features.
Meet Ashley, a 40-year-old professional who wants to retire at 64. She currently has $50,000 in retirement savings and contributes $5,000 annually to her 401(k). Her employer adds another $10,000 yearly through matching and profit-sharing. Let's see how Ashley uses the Retirement Planner to understand her retirement outlook.
Understanding the Two Tabs: Basic and Advanced
The Retirement Planner offers two different views to accommodate users with varying levels of financial planning experience. The Basic tab provides essential information without overwhelming details, while the Advanced tab gives you granular control over every aspect of your projections. Most users start with Basic and graduate to Advanced as they become more comfortable with retirement planning concepts.
Basic Tab
Perfect for getting a quick overview of your retirement projections. This tab shows:
Your current age and retirement age
Total investment balances
Contribution amounts
Expected living expenses
Retirement income sources
Return projections
Tax rate estimates
Advanced Tab
Provides more detailed control over your projections, allowing you to:
Fine-tune investment returns for different life stages
Adjust tax rates for pre and post-retirement
Add multiple income sources
Include one-time contributions or expenses
Account for inflation
Ashley starts with the Basic tab to get a general picture, then switches to Advanced for more precise planning.
Setting Up Your Current Details
The foundation of accurate retirement projections starts with entering correct information about your current situation. This section captures your age, expected retirement timeline, and current investment balances. Taking time to ensure these details are accurate will make your projections more reliable and actionable.
Age Settings
Ashley enters:
Current age: 40 years
Retirement age: 64 years (shown in the center)
Life expectancy: 78 years
The life expectancy setting is crucial because it determines how long your money needs to last. Ashley chose 78 based on her family history and health, but you might want to plan for longer to be safe.
Investment Balances
Ashley's current retirement savings total $50,000. This includes:
401(k) accounts
IRA accounts
Other investment accounts designated for retirement
Simplifi can automatically pull this data if you've connected your investment accounts. The note at the top reminds users that "Simplifi uses your investment balance data when available, all other data is generic."
Understanding Contributions
Contributions form the backbone of your retirement savings strategy, representing the money you regularly add to your retirement accounts. Understanding the different types of contributions and how they work together helps you maximize your retirement savings potential. The distinction between taxable and tax-deferred contributions affects both your current tax situation and your retirement income planning.
Annual Taxable Contributions
Amount: $5,000
What it includes: Money from your paycheck that goes into retirement accounts after taxes
Annual Tax-Deferred Contributions
Amount: $10,000
What it includes: Pre-tax contributions like traditional 401(k) deposits and employer matching
The distinction between taxable and tax-deferred matters because it affects:
Your current tax bill
How much tax you'll pay in retirement
The growth of your investments
Ashley's employer provides a generous match, effectively tripling her personal contribution. This free money significantly boosts her retirement projections.
Expected Annual Increase
Ashley sets this at 3%, assuming her salary (and therefore contributions) will grow with inflation and merit increases. This helps the projections stay realistic over decades.
Planning Your Retirement Expenses
Estimating your retirement expenses requires careful thought about how your lifestyle and needs will change when you stop working. Many expenses will decrease, such as commuting costs and work clothes, while others like healthcare and leisure activities may increase. Creating a realistic expense estimate helps ensure your retirement savings will support your desired lifestyle.
Annual Living Expenses
Ashley estimates she'll need $60,000 per year in retirement. This covers:
Housing (mortgage-free by retirement)
Food and groceries
Healthcare costs
Transportation
Entertainment and hobbies
Travel
To calculate your needs, consider:
Your current spending (track it in Simplifi!)
Which expenses will decrease (commuting, work clothes)
Which might increase (healthcare, travel)
Whether you'll have paid off your mortgage
Annual Retirement Income
Ashley expects $40,000 in annual retirement income from:
Social Security benefits (estimated at $25,000)
Part-time consulting work ($15,000)
This $40,000 income means Ashley only needs to withdraw $20,000 annually from savings to meet her $60,000 expense target, significantly extending how long her money lasts.
Understanding Return and Tax Projections
Investment returns and taxes significantly impact your retirement projections, yet they're often the most misunderstood aspects of retirement planning. The Retirement Planner uses different return assumptions for your working years versus retirement, reflecting the typical shift from growth-focused to preservation-focused investing. Understanding these assumptions helps you evaluate whether your projections are reasonable.
Investment Returns
The planner uses two return rates:
Pre-Retirement: 7% (while you're still working and can take more risk)
Post-Retirement: 3% (more conservative to protect your nest egg)
These returns represent average annual growth after inflation. Ashley's 7% pre-retirement return reflects a balanced portfolio of stocks and bonds. The 3% post-retirement return assumes a shift to more conservative investments.
Tax Rates
Pre-retirement: 22% (Ashley's current tax bracket)
Post-retirement: 22% (estimated based on retirement income)
Taxes significantly impact your retirement funds. Every dollar withdrawn from tax-deferred accounts like traditional 401(k)s gets taxed as ordinary income.
Reading the Retirement Projections Chart
The retirement projections chart transforms complex calculations into an easy-to-understand visual representation of your financial future. This chart shows not just one prediction but three scenarios, helping you understand the range of possible outcomes based on market performance. Learning to read this chart empowers you to make informed decisions about your retirement strategy.
The Three Scenarios
High Estimate (top dotted line): Best-case scenario assuming strong market returns
Expected Net Investments (middle solid line): Most likely outcome based on average returns
Low Estimate (bottom dotted line): Conservative scenario with poor market performance
Key Points on Ashley's Chart
Looking at Ashley's projections from the first image:
Age 40-64: Steady growth phase as contributions and returns build wealth
Age 64: Retirement begins, growth slows as withdrawals start
Age 70: Peak wealth around $1.5M in the expected scenario
Age 78: Projected to have about $1M remaining
The shaded purple area between high and low estimates shows the range of possible outcomes. The wider this range, the more uncertainty in your projections.
The "Retirement Year" Marker
The vertical green line at age 64 marks Ashley's planned retirement. This visual separator helps you see:
Your accumulation phase (before the line)
Your distribution phase (after the line)
Understanding "Life Expectancy"
In the Advanced view (second image), the "Life Expectancy" marker at age 78 shows when Ashley plans to have her money last until. The chart continues beyond this point, showing what would happen to any remaining funds.
Using the Show Inflation-Adjusted Dollars Toggle
The inflation adjustment feature helps you understand what your future money will actually buy in today's terms. Without this adjustment, the large numbers shown for future years can be misleading since inflation erodes purchasing power over time. This toggle switches between showing nominal future dollars and real purchasing power.
The checkbox below the chart lets you switch between:
Nominal dollars: Future values without inflation adjustment
Real dollars: Today's purchasing power
Ashley uses inflation-adjusted dollars to better understand what her future money will actually buy. A million dollars in 38 years won't buy what it does today!
Making Adjustments to Improve Your Outlook
If your retirement projections show challenges ahead, don't despair. Small changes made today can have dramatic impacts on your retirement security thanks to the power of compound growth. The Retirement Planner lets you test various strategies to find the right combination for your situation.
Increase Contributions
Boost 401(k) contributions
Open and fund an IRA
Take advantage of catch-up contributions after age 50
Delay Retirement
Work until 66 or 67
Consider phased retirement
Continue part-time work longer
Reduce Expenses
Plan to downsize housing
Eliminate debt before retirement
Budget for lower discretionary spending
Optimize Investments
Review asset allocation
Reduce investment fees
Consider tax-efficient strategies
Advanced Features for Detailed Planning
The Advanced tab unlocks powerful features for users who want more control over their retirement projections. These features allow you to model complex scenarios that better reflect real-life situations, such as varying investment returns over time or accounting for major one-time expenses. While the Basic tab provides a solid foundation, the Advanced features help you create truly personalized projections.
Customized Return Rates
Instead of flat rates, you can set different returns for different life phases:
Higher returns during early career (more stocks)
Moderate returns approaching retirement
Conservative returns in retirement
Multiple Income Sources
Add various retirement income streams:
Social Security (with accurate start dates)
Pensions
Rental income
Part-time work
Annuities
One-Time Events
Account for:
Inheritance
Home sale proceeds
Large medical expenses
Children's weddings
Dream vacations
Inflation Adjustments
Set different inflation rates for:
General expenses
Healthcare costs
Income sources
Common Questions and Best Practices
Years of helping Simplifi users with retirement planning have revealed common concerns and effective strategies. This section addresses frequently asked questions and shares best practices developed through real-world experience. Following these guidelines will help you avoid common pitfalls and make the most of your retirement planning efforts.
How Often Should I Review My Plan?
Review your Retirement Planner:
Annually during financial check-ups
After major life events (marriage, children, job changes)
When market conditions significantly change
As you approach retirement (review quarterly)
What If My Projections Look Bad?
Don't panic! You have options:
Start by verifying your inputs are accurate
Look for small changes that compound over time
Consider working just 1-2 years longer (huge impact!)
Explore ways to reduce retirement expenses
Investigate additional income sources
Should I Use Conservative Estimates?
Yes! It's better to be pleasantly surprised than caught short. Consider:
Using life expectancy of 90+ years
Assuming lower investment returns
Planning for higher healthcare costs
Building in a safety margin
How Do I Account for Unknowns?
The three projection lines help by showing a range. Also consider:
Social Security changes
Healthcare cost inflation
Long-term care needs
Market volatility
Inflation spikes
Tips for Getting the Most from Your Retirement Planner
Maximizing the value of the Retirement Planner requires more than just entering numbers and reading results. These practical tips come from observing how successful retirees use the tool to make real improvements in their financial futures. Implementing these strategies will help you move from passive planning to active retirement preparation.
Start with accurate data: Connect all retirement accounts to Simplifi
Be realistic about expenses: Use your actual spending data from Simplifi
Don't forget about taxes: They significantly impact retirement income
Plan for the unexpected: Build in cushions for emergencies
Review regularly: Your situation and goals will change
Consider multiple scenarios: Use the tool to test "what-ifs"
Focus on what you can control: Savings rate matters more than market returns
Taking Action Based on Your Projections
Creating projections is just the first step; the real value comes from taking action based on what you learn. This section helps you translate your Retirement Planner insights into concrete steps that improve your retirement readiness. Ashley's example shows how reviewing projections can lead to specific, achievable actions.
After reviewing her projections, Ashley decides to:
Increase her 401(k) contribution by 1% each year
Open a Roth IRA for tax diversification
Plan to work part-time from 64-67 for extra security
Pay off her mortgage by age 60
Build a separate emergency fund for retirement
Conclusion
The Simplifi Retirement Planner transforms complex retirement calculations into clear, actionable insights. By regularly updating your information and testing different scenarios, you can make informed decisions today that lead to a secure retirement tomorrow.
Remember, retirement planning isn't about perfection; it's about progress. Start where you are, use the tools available, and adjust as you go. Whether you're 25 or 55, the best time to plan for retirement is now.
Ashley's example shows that with consistent savings, reasonable assumptions, and regular monitoring, a comfortable retirement is achievable. Use the Retirement Planner to create your own success story, one projection at a time.