Some Good Financial Calculators to Help You Set Your Retirement Number

I often get asked how much they should save for retirement and I usually point people to the process I used to set my retirement number. But now I have some additional options to suggest -- some good retirement calculators I found at CareerJournal They highlight the following and have these comments:

• Ballpark Estimate - This calculator is easy to use, and it allows you to include other income, such as part-time work. The downside: The results are somewhat confusing, and you have to re-enter every number if you go back to rejigger your results.

• Nationwide's Retirability Check - This tool offers interesting data on how Americans overall fare on the same measures. Also, home equity is calculated as an asset. However, the solutions offered are general and not specific to the data you enter.

• AARP - While this calculator isn't quite as slick as some others, it offers some of the easiest-to- understand results, including a graph, followed by a "What if I change..." option to easily enter different variables.

• Fidelity's MyPlan (click on the "MyPlan" ad) - This tool is easy to use. Plus you get a range of results, making it clear how important market performance is. However, the tool assumes you want just 85% of preretirement income. Also, many Quick Check results seem intended to steer visitors to Fidelity products.

I tried the Fidelity calculator and REALLY liked it. It was easy, fun, and gave me a very good take on where I stand financially. And it gave me almost the same number I got doing my own calculations, so it must be good. ;-)

So check some of these out and let me know what you think.

And if you want some more thoughts on saving for retirement, see these posts:

• Calculate Your Retirement Number -- And You'll be Happier You Did

• The Last Words on Roth IRAs Versus Traditional IRAs (At Least for Today)

• 10 Retirement Pitfalls

Comments

[plonkee]

I like this. Even though they state that I'm only just on course to make my retirement figures if the market does well. Much as it pains me, they're probably right.

[Matt]

The key to whether these calculations are actually effective is all in the assumptions and methodology they use. Here's my analysis, based on feedback from leading Certified Financial Planners who did competitive research for our startup:

Choose to Save is pretty much worthless, since they don't even calculate based on how much you're saving and how that adjusts over time. Way to many key assumptions hardwired into the calculator.

Nationwide is OK, but it's pretty much a marketing tool.

Fidelity- here's a post that deals with the issues inherent in this tool:
http://blog.boulevardr.com/2007/08/18/all-aboard-the-ss-fidelity/

You might want to evaluate Financial Engines as well.

The issue with all of these tools is that they don't offer a clear process to get on track for retirement. They tell you how much you need and then you're on your own. Planning for retirement is much more involved, since as your life situation changes and market conditions change, you need to make course corrections. A process based tool would be much more helpful.

[Joe]

For those willing to spend some money (~150) for a more robust, unbiased planning tool, ESPlanner http://esplanner.com/ is one of the best I've found. The technology is a bit dated, but the features and logic are excellent. I'm not affiliated with the company.

[John Murphy]

From reading elsewhere I think the fact that you have actually spent time calculating what you will need in retirement puts you ahead of probably 99% of people in the US. You seem to be very conservative about what funds you might need as you haven't reduced any potential needs as you grow older (although my limited knowledge of Medicare in the US probably means that's a good thing).
Are you targetting yearly amounts that go towards your fund or doing this over a different timescale?

[FMF]

Yes, I set aside yearly savings and then review my status at the end of each year.