Spreadsheets: A Luddite’s Necessary Inconvenience?

Ah, retirement. That grand, glorious moment when I traded the frantic pace of business ownership for… well, for whatever mischief I could inflict on my wife Suzie. I don’t like spreadsheets, the temptation to take a stab in the dark when your spreadsheet adverse is strong.

It’s easy to do, isn’t it? You look at your savings, you subtract a few zeros, and you just decide—right there, in a sudden burst of confidence—that you can safely withdraw, say, $10,000 a month. It sounds perfectly reasonable, doesn’t it? It feels right. But that gut feeling is the equivalent of me telling Suzie her dress looks weird ten minutes before leaving for dinner…things aren’t going to end well.

This is the reason why I stopped guessing and started building a spreadsheet model for retirement. I don’t like them but, unfortunately , they’re much better than a stab in the dark. It’s tedious, but they work. It lets you take that big question—Do I have enough?—and break it down into manageable, less alarming pieces.

I couldn’t just put my total nest egg in one cell and start subtracting. A proper model isolates the different streams of income (state pension here, private investments there), the core expenses ( groceries, utilities etc), and, crucially, the “fun” money. By breaking down the expenditures, you suddenly realise that the $10,000 you plucked out of thin air needs to cover $4,500 in fixed costs and leaves $5,500 for travel, hobbies, and random spontaneous generosity. It replaces the single, dangerous, gut feeling with a logical, year-by-year financial blueprint.

The power of this model comes from using best guess assumptions. In retirement planning, you’re dealing with long stretches of time. I simply can’t know what inflation will be in 15 years, or what return my investments will generate next decade. A random stab at a 10% return is just a wish.

A best guess assumption is not a short in the dark, it’s an informed variable. You look at historical inflation rates, you use a slightly cautious long-term average for your investments, and you factor in a realistic life expectancy. Although if I keep criticising dresses, it won’t be very long. You isolate these figures, maybe assuming a 3% annual inflation rate or a 4% real return, (this simply means taking inflation of the historical nominal return) in their own cells.

This allows you to play the most important game of all: scenario testing. What if inflation spikes to 5% for the next five years? What if Suzie decides, for some strange reason, to draw an extra $10,000 for new dresses? With a model, you change that one key assumption, and instantly, you see the impact on your money in year 25. It’s a dress rehearsal, pun intended, for financial survival. You move from the anxiety of not knowing to the confidence of knowing the risks.

As a spreadsheet luddite, even I have to concede, running a few scenarios with educated assumptions is a far better way to spend your time than trying to guess a single magic number. It turns your hopes into a real plan that can weather the inevitable unknowns of life, leaving you free to enjoy the reality of retirement, without the fear of ending up broke twenty years too soon and having to spend your last $500 on a four season tent.