Build a financial retirement plan with confidence

Financial retirement is a high stake and low certainty type of planning. I’m looking for a retirement number - can I safely retire when I have $X? The cost of being wrong in the late stage of life is extremely bad, since no one can roll back time and have a redo. Low certainty as no one can predict the future for my health, lifespan, or world’s climate, economic, or geopolitical situations. Of course, money itself is not going to solve any actual problems, but it’s an important tool that simplifies and unblock troubles. 

My personal approach to these important and tough problems is to expand, synthesize, and apply.  

1. Expand - Start with what I know, and ask questions about what I don’t know and who can help me answer those questions. I like the rules of 3: read 3 books, talk to 3 “experts”, and try 3 software / tools. 
2. Synthesize - Filter and build my mental model. Like mixing multiple audio channels, find areas where sound converges, amplify, and enhance each other. Also find areas where there is disharmony and cancel each other out. Be intentional and build hypotheses about these effects. 
3. Apply - This is the most important part. However small I start, taking the all important first step, then build the habit of taking incremental steps. 

Currently, I’m in the stage of applying. I spoke with 2 financial advisors, read a few books, and used 3 retirement planning software packages. Here are my big takeaways. 

• There is strong convergence on the retirement financial number by back of the envelope,  averaging method, and more advanced monte carlo method. Multiple independent software with similar data sets and assumptions all clustered around the same result. This is super important for me. The clustering effect of multiple independent predictions. 
• The divergence is the degree of acceptable volatility and optimization goals: reduce emotional stress of financial volatility, avoid running out of money, avoid unnecessary taxes, and leaving a legacy. 

How I am applying what I learned. 

• Writing about it. Trying to explain and teach what I learned is forcing me to clearly organize these ideas in my mind. Talking to my spouse and writing a blog is very helpful for me. 
• Deciding on a change. Rationally analyzing my decisions and biases then changing my mind to buy annuity is a big step.
• Building a spreadsheet. This is where I geek out and see if I can build a spreadsheet to model the different scenarios and test the different hypothesis on the divergence. I wouldn’t recommend this for anyone else, but I’m having a lot of fun with it and discovering some counterintuitive results.  

How would you build a retirement plan?

Ricky