Morningstar's John Rekenthaler, has written a useful article about Vanguard's Retirement Income Calculator. These are excerpts:
When Vanguard's Retirement Income Calculator Stopped Making Sense"The president of the American Finance Association, Dr. David Hirshleifer, noticed something peculiar about Vanguard's Retirement Income Calculator. By its reckoning, a hypothetical 55-year-old investor who saved at the tool's highest possible rate, earning the highest possible return, holding the highest possible current retirement assets, and willing to settle for the lowest possible income-replacement rate … would fail."
"Financial-services firms sometimes exaggerate their customers' retirement needs. Perhaps Vanguard has done the same."
"a calculator that fails the apparent best case looks pretty silly."
"Even calculators that run simulations show midpoint results that imply more inevitability than exists."
"To reach the targeted level of retirement income, the hypothetical investor must work until age 81, all the while receiving her full salary. Such an event is more likely to occur than pigs flying."
"The moral: Retirement-income calculators serve middle-tier workers well. Their settings are calibrated accordingly, and their rules of thumb, such as the appropriate range of replacement rates, are sound. They are unsuited for those on the outside, though."
Jack Bogle's Words of Wisdom: "The data show us that only about 5 percent of the managers will outperform the market over an investment lifetime."