0.cached.png
By Linda Stern
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
If you had a buck for every retirement calculator on the Web, you wouldn't need any of them--you'd be rich enough to retire. Virtually every broker, fund company, insurance agent, financial planner and more than a few federal agencies have a planner on their sites. They're seductive; punch in a few numbers, and your dream future appears. Sure beats working, especially when you can "assume" whatever you want; zero inflation, perfect health into your 90s and 20 percent-a-year returns. If you don't like what one is telling you, you can always find another. That's the problem, says Olivia Mitchell, a professor at the University of Pennsylvania who's studied the sites. "You get different results in terms of what you should save, and in terms of how you should invest it," she says. So try a few. Some are quite good; most will flag you if your plan is unrealistic. Mitchell tells daydreamers to see what happens when they change their retirement age, or annual-contribution or -inflation assumptions. And remember that no one calculator considers everything--some ignore taxes, others assume unrealistically steady returns. Many assume you'll spend the same amount throughout retirement, though typically expenses rise, then fall later on. Most ignore home equity, or the possibility that you'll inherit some money. Here are some sites that will tell you all you'll want to know about your prospects for hitting that hammock.
Personal Asset Manager, by Financial Engines (financial engines.com), is the gold standard. Founded by Nobel Prize winner William F. Sharpe, it reflects the latest thinking on portfolio management, risk and the value of well-run inexpensive mutual funds. It lets you play what-if games, and load funds available at your brokerage firm, and offers specific advice on which funds will help you reach your goal. Too bad it's no longer free, but you can get a very thorough analysis of your retirement situation for a $39.99 quarterly fee. If you want to dump your whole financial life, including college savings and the like, into it, that will cost you $300 a year.
Advice Online, from Morning-star (Morningstar.com), is a relatively new feature and does the same great job that Financial Engines does, albeit with a clunkier interface. It offers the huge Morningstar data-base of mutual funds and a bear-market simulator to test your risk tolerance, and gives specific portfolio advice. Available to Morningstar Premium Members, who pay $115 per year and also get stock re-search and nonretirement portfolio advice.
Read More on News
Social Security Administration (SSA.gov) offers some easy and free calculators for a good handle on your future benefits. One tells you what to expect if you retire at different ages. Another does the "break even" analysis for you, showing you how long you have to live to make it worth waiting until 70 to collect higher benefits, for example.
Dinkytown, from KJE Computer Solutions (Dinkytown.com), lets you go crazy with graphing calculators that help you plan your retirement, choose between a traditional or Roth IRA and decide whether an annuity is right for you. These calculators don't have lots of extras, and don't want to know the details of your 401(k) holdings, but they'll give you some quick answers and a nice picture.
The Ballpark Estimate, from the American Savings Education Council (asec.org/ballpark), is quick, easy and the quintessential financial-industry-sponsored, scare-the-pants-off-you calculator. It tells you how much to save every year, but low-balls Social Security, and suggests high retirement spending and some changes to tax rates. It's not wrong, just ultraconservative. At worst, it will make you save more than necessary, hastening the day when you step away from the computer and actually retire.
View 0 Comments
Submit Correction
View Editorial & AI Guidelines