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Will your retirement savings last?
Will your nest egg last?
NEW YORK (CNNMoney)

My financial adviser ran Monte Carlo simulations that say I have an 85% chance my retirement savings will last into my 90s. Is an 85% probability safe enough? -- Tracey G.

The short answer is yes. Although there's no official benchmark for the appropriate margin of safety, I think most advisers would say that an 80% to 90% probability of success is about right for most people.

Fall below 80% and you could find yourself short on money later in retirement. Shoot for a chance of success higher than 90%, on the other hand, and you may end up sitting on a big pile of savings very late in life.

That may not sound like a bad thing, but it could mean that you lived more frugally than you had to during your career and stinted more than necessary in retirement. In other words, you might have been able to spend more freely and enjoy yourself more during both your working and retirement years.

That said, there are some caveats to the probability numbers that advisers generate with their retirement planning software -- or that you can get on your own from calculators like those in my Retirement Toolbox. One major caution: your chances of success can drop pretty dramatically if your nest egg's value takes a sharp dive. Given the stock market's recent volatility, that's a possibility to keep in mind.

Before I get into the nuances surrounding these projections, however, I'm going to briefly explain Monte Carlo simulations.

Related: Investing smart in a rocky market

Named after the famed casino in Monaco, Monte Carlo simulations attempt to incorporate the variability of real life into financial projections. The adviser plugs in such information as how much you saved, how much you're saving on an ongoing basis (if you're still working), how you invest that money, when you plan to retire, how much you plan to withdraw from your savings once you retire and how long you estimate you'll need your savings to last.

Once all this information is entered, the software or calculator creates hundreds or even thousands of different scenarios, or pathways, that your nest egg could take. Some reflect conditions in which the market performs well and inflation remains tame; others factor in a market crash and higher inflation. In some of these scenarios, you run out of money early in retirement. In others, you may never run out. But in most, the length of time your dough lasts falls between these extremes.

So, for example, if you're 55, plan to retire at 65 and want your savings to support you at least until age 95, you would plug in all the information about your savings, investments and projected spending, the software would crunch the numbers and...voila! It will tell you the probability that your savings will sustain you to 95.

Calculator: How much will I need for retirement?

If your savings isn't able to generate the income you need to support your spending until age 95 in 15% of the scenarios the software runs, then your probability of success is 85%. If you run short in 30% of the scenarios respectively, your probability of success is 70%.

Now for those nuances.

The results you get when you run Monte Carlo simulations seem very exact, but remember: They're long-term projections based on the assumptions you plug in. So they're not as precise as they seem. No one really knows how the markets will perform over the next 10, 20 or 30 years. Or what inflation will do. Or whether you'll be able to stick to your savings plan or face large unanticipated expenses in retirement (such as larger-than-expected health care costs).

Related: Why women are losing the retirement savings game

So you want to try to keep your assumptions as reasonable as possible -- that is, no 10% or 15% annual returns or overly aggressive investment asset mixes, no unrealistic savings rates or a retirement budget that not even an ascetic could stick to. And you should think of the percentage chance of success more as a possibility than a guarantee.

You can see how your chances of success might rise or fall if you (or the markets) behave differently. Save more during your career, and you'll see the probabilities rise. Likewise, if you tone down spending in retirement.

Keep in mind too that the percentage probability of success that everyone focuses on tells you only whether you'll be able to draw a given amount of income up to whatever age you plug in. It doesn't tell you how much of your savings will be left at that point.

So you may have an 85% chance of success and have $1 of savings left at age 95 in some scenarios. In others, you could have an 85% chance of success and still have nearly as much money as you started with at retirement -- or more.

That's important to know because you're probably better off spending more earlier in retirement than ending up at an advanced age with a huge savings balance, unless you're really set on leaving a big stash to your heirs.

You need to be especially careful if your portfolio's value takes a large hit, especially just before or early in retirement. For example, a 65-year-old who plans to follow the 4% rule -- that is withdraw 4% of his nest egg's value initially and adjust that amount annually for inflation -- could easily see the chances of his portfolio lasting 30 years drop by 25%, if his portfolio took a 20% dive on the eve of retirement. The combination of the investment loss and withdrawals would so deplete the value of the portfolio that it can't recover sufficiently even when the market eventually turns around.

Related: The 3 biggest risks every retirement saver should know about

Given how much your probability of success can fluctuate for any number of reasons, you should have your adviser rerun the simulations -- or rerun them yourself -- every year or so, using more current information about your age, savings balances and such.

You don't have to alter your plans if your odds of success rise or fall just a bit in a given year. But if you notice that the probability has been trending steadily downward over time -- or has suddenly plunged in the wake of a severe market downturn -- then you want to re-examine what you're doing and make adjustments to get back on track, such as saving more if you're still working or paring your spending for a while if you've already retired.

The key, though, is to create a retirement income plan and manage it over time, so you can make relatively small corrections along the way, rather than letting things slide and then having to deal with a crisis.

So kudos to you for planning in the first place, and for arranging your financial affairs so that, at this point at least, you appear to have an excellent shot at a secure retirement. If you keep monitoring your progress and stand ready to make tweaks when necessary, chances are your prospects will remain that way.

Walter Updegrave is the editor of RealDealRetirement.com. If you have a question on retirement or investing that you would like Walter to answer online, send it to him at \n This email address is being protected from spambots. You need JavaScript enabled to view it. ' target='_blank'>This email address is being protected from spambots. You need JavaScript enabled to view it. .

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6-figure oil jobs lead to massive shortage of home builders
Truck-driving mom pulls in six-figures
NEW YORK (CNNMoney)

In the oil boom towns of North Dakota, Texas and Colorado there's a big demand for new homes -- but there's no one to build them.

That's because construction companies keep losing skilled workers to the oil companies, which are offering big bonuses and six-figure salaries.

Even when a new construction worker is hired for a job, it's often not be long before he's poached by an oil company, said Granger MacDonald, owner of The MacDonald Companies, a home builder in Kerrville, Texas.

Recruiters even loiter at truck stops and offer drivers $10,000 signing bonuses to take jobs driving for the oil companies, he said. Some drivers will abandon their loads on the spot, leaving others to finish delivering the goods.

"If you can pass a drug test and have a truck license, you can earn $100,000 a year driving an oil truck," said MacDonald.

With so many carpenters, plumbers, electricians and other trade workers going to work for the oil services companies, builders have to rehire and train crews constantly.

Related: Forget oil, there's a baby boom in North Dakota

"A project that should take 14 months, takes 20," said MacDonald. "I'll have 20 workers on a crew in Midland, Texas, in the heart of the oil patch, and the next week, only 10 will show up. I hire back up to 20 and a week later it will be down to 12 again."

Things are even worse in Williston, North Dakota, where the oil boom has attracted so many newcomers that there is a major housing shortage and many people are forced to live in campers, cars -- even tents.

Terry Meltzer of Granite Peak Development in Williston is trying to bring in workers to build much needed multi-family and single-family homes. Ironically, however, there are few places for new workers to live and the places that are available are very expensive.

Related: Six-figure salaries but homeless

One of the rare places available right now is a 1,150 square-foot apartment that costs $3,200 a month. That's three to four times the rate charged by landlords outside the state's oil patch.

This high cost of living means that home builders have to pay higher wages and charge more for their homes. And the constant hunt for workers means that projects take longer. "You have to work at a slower pace than you'd like," said Meltzer.

Eddy Mitzel's construction outfit builds in the North Dakota cities of Bismarck, Mandan and Dickinson, a good hour and a half or more from Williston -- but it's still hard for him to find crews.

"I'm bringing in workers from other parts of the country where the economy has not yet recovered," he said. "The problem is that as the economy rebounds, this resource is drying up. We need experienced concrete subcontractors, painters, drywall installers and tapers, siders."

Related: My students make twice my salary

In Colorado Springs and Fort Collins, near Colorado's oil boom, builder Marc Towne has had to get creative in order to deal with the labor shortage. He times projects differently now so he can promise his workers steadier work and he uses products that require less skilled manual labor. For framing a home, for example, he buys lumber that's pre-cut, fitted and labeled at the factory.

As the price of oil drops, these builders are hoping their hiring problems will ease.

But there is another threat looming: new oil fields are opening up South of the border. The Mexican government recently ended its 76-year state monopoly by allowing for private and foreign investment into its oil and gas reserves. There are nearly 27 billion barrels of oil believed to be beneath the Gulf of Mexico alone.

"Mexico is where a lot of our labor comes from," said Dallas home builder Michael Turner.



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Social Security benefits will increase by 1.7% in 2015
Biggest retirement mistakes
NEW YORK (CNNMoney)

Social Security checks will rise by 1.7% -- which translates into $22 more each month for the average retired worker.

In 2015, the average worker will receive $1,328 a month, or $15,936 a year, according to the Social Security Administration. More than 58 million recipients will see the bump in their checks starting in January.

Next year's annual cost of living increase is up from 1.5% this year, but still less than 2012's increase of 3.6%. Seniors received no increases to their benefits for two years prior as prices fell due to the recession.

Related: My life as an expat retiree

2015's modest increase is tied to Wednesday's release of the government's main inflation measure, the Consumer Price Index, which showed that prices were up 1.7% during the 12 months ended in September.

But seniors still face sharper increases for utility and grocery bills, among other essentials. Housing costs are also rising faster than inflation, making it hard for retirees who don't own their home.

chart social security 2015

Meanwhile, since seniors don't have to commute to work each day, they may be less likely to enjoy the benefits of a more than 3% drop in gas prices, as measured in the CPI.

Many retirees are already struggling to get by, with the majority relying on Social Security as their main source of income.

Related: America's oldest workers: Why we refuse to retire!

Nearly 10% of people 65 and older live in poverty, according to the U.S. Census Bureau, while women and minorities are far more likely to struggle.

barbara traynor instory

For 74-year-old Barbara Traynor, the annual bump will mean an increase of about $24 to her current monthly checks of $1,425, which is her main source of retirement income.

"I think it's generous of the government to give us an increase at all," she said. "A lot of people in the business world aren't getting increases."

Related: Meet the country's roving retirees

Traynor says she's in good health so she spends only a few hundred dollars on medical expenses each year, but knows that many seniors aren't as lucky.

Plus, she's found a unique way to stretch her Social Security income each year. For nearly a decade, the retired administrative assistant has completed a variety of six-month volunteer stints, during which she typically enjoys free room and board. When she's not volunteering, she lives with her oldest son in the Albany area.

"I can manage my car insurance and my gas and there is nothing else unless you have personal things you want to spend money on," said Traynor, who wrote about her frugal lifestyle in her book Second Career Volunteer. "You can certainly make it work."

retired women vivian jenkins nelson
Vivian Jenkins Nelsen, 69

Minneapolis resident Vivian Jenkins Nelsen will see a similar-sized increase to her monthly Social Security checks of $1,461.

But Nelsen, 69, isn't feeling as secure. She and her late husband drained their retirement savings and took out a second mortgage on their homes to cover medical bills as he battled Parkinson's disease for nearly two decades before passing away in 2010.

Currently, her Social Security check doesn't cover much more than her $1,100 monthly mortgage payment.

Calculator: Will you have enough to retire?

As a result, she says she plans to keep working as an adjunct professor and consultant for as long as she can to cover her other major expenses. She spent nearly $300 a month on heating bills last winter, for example, while she spends hundreds of dollars a month on medication to treat her chronic back pain.

"I couldn't live on Social Security," she said. "There is just no way."

The Social Security Administration also announced Wednesday that the maximum amount of earnings that workers pay Social Security taxes on will increase from $117,000 to $118,500 in 2015, based on the increase in average wages.


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Change.org calls new baby leave most generous in tech
Facebook, Apple: We will pay to freeze your eggs
NEW YORK (CNNMoney)

The latest Change.org initiative starts with itself.

The company that runs the popular petition website announced a new parental leave policy on Monday that it called the most generous in the tech industry. And it would like to see other companies to follow its lead.

Change.org, which has about 200 employees, will give new parents 18 weeks of paid time off from work -- a significant increase from its current offering of pay for six weeks of leave.

The policy reflects the changing face of American families: It applies to anyone who gives birth and her partner, regardless of sexual orientation and marital status. Parents who adopt are also eligible.

The offering goes far beyond the requirements of federal law, which entitles a birth mother and her spouse to 12 weeks of time off without pay. The federal law does not apply to some companies, such as those with less than 50 employees.

Related: 8 rights of pregnant women at work

"Giving people unpaid leave only solves half the problem," said Jennifer Dulski, the president and chief operating officer of Change.org.

"Our goal was to create a generous and equal leave policy that supported all parents," she said, amid trends such as fathers "playing a more active role in their families."

The company said it outpaces the offerings of the Silicon Valley giants, which are generally known for generous benefits.

Change.org, however, is organized differently from most other tech companies. It is a benefit corporation, which requires that management consider the impact of business practices on the community, society and the environment.

There's a business case for the policy, too. Dulski said the policy is aimed at making employees "less stressed, more focused, more excited to join the company ... and more excited to stay longer."

Related: Transgender workers' legal rights to be formalized

Proponents of leave equality for men and women say it will help address pay disparity.

"When only birth parents are able to take leave, individuals are forced to follow traditional gender roles that perpetuate inequality," the company said in its announcement.

Supporters of paid leave note the U.S. is one of a few countries that mandate only unpaid leave. Some states, such as California, New Jersey and Rhode Island, have paid leave laws.

Dulski said the company is not actively involved in promoting legislation, but is encouraged by what some states are doing.

The gender pay gap 'hasn't been solved'

Bureau of Labor Statistics data from 2013 found only 12% of workers were granted paid family leave. The benefit was more common among higher earners than lower earners, the survey said.

The White House has voiced support for moving toward paid leave, as well as expanded protections for pregnant workers.

"These aren't frills -- they're basic needs," President Obama said in June, citing paid leave, access to childcare and workplace flexibility for parents.

Change.org said that 51% of its employees are women, and that 27% of the engineering team is female.

Related: Is rising income inequality un-American?


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