What Do These Number Mean?

Given the starting year, the top graph shows the taxes, fees and money earned if it were to be withdrawn in the final year, for every final year until the end of the year range provided. All of these calculations are made in the dollars of the current date. That is to say, if you put a time span of 1910-1940, this calculator will use the inflation increases and S&P percent increases and dividend return rates, but act as if those rates are applied starting today over the next 30 years. Then it will deflate all the values to today's value of money, to return real money values. It also inflates the contributions made to the fund, so it acts like your increasing your contributions, based on each year's inflation. The bottom graph graphs every span (in order) of the length specified by the end - beginning of the year range provided.

Tax Calculations

The tax calculations I do are adjusted for inflation and start state and federal tax brackets. Specifically, I used the state income tax if there was one (I didn't consider some states special rules). I also considered income; income isn't taxed, but does hold the ability to push an investor into a higher state or federal tax bracket for capital gains. I used 2017 tax brackets but before doing any tax calculations, I deflated how much was being taxed to 2017 dollars, applied the appropriate tax bracket, and re-inflated to the time periods dollar, which would later be deflated again for the result. Capital Gains taxes are only applied when the money is withdrawn, and only applies to taxable gains. This means money lost to fees would not be taxed, nor the original investments made each year. All dividends are taxed as qualified dividends, and taxed as they are earned. After being taxed as earned, they are re-invested into the fund.

Fees

The fees, or MER for Management Equity Ratio, are deducted each year. Just as returns compound in your favor, fee's compound against you. The MER is reduced from your total money each year, if your MER is 2%, then 2% of all the money invested goes to the financial institution handling the money, every year. Fees typically range from .05% (vanguard’s index fund) to 3% (if you’re paying 3%, they're robbing you blind!). Fees are a game changer, and in something like a retirement fund held for around 40 years, they can be hundreds of thousands of dollars. Most mutual funds charge 1-2%, but are typically unable to provide sufficient evidence that they can outperform a simple index fund. Don't take my word for it though, this tool is a great way to explore how devastating fees can really be.