Q: Can you recommend any online retirement calculators?
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A: Mountaineers plan to scale Mount Everest. Runners train for a marathon. But for investors, retirement is the big long term goal.
Few financial goals are more important than making sure you have enough money when you are elderly. Do the math wrong and you might wind up eating dog food when you're 90 years old. But not only is calculating how much you need to retire very important, it's extraordinarily complex. There are many variables that go into measuring how much you need to retire.
Making things even more complicated is the fact your retirement will likely span several decades. Not only do you have to make sure you have enough when you retire at age 65 you also don't want the money to run out, even if you're retired for 30 or more years. You must plan for tremendous economic disruptions, given that your portfolio may be invested for more than 30 years.
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Don't, though, let the enormity of the task of retirement planning scare you into inaction. There are a number of useful online retirement that can help you start to think through all the variables that go into retirement planning.
Let's be clear. None of the online retirement planning calculators are perfect. It's a bad idea to take the results of just one online calculator and consider that to be the magic number. It's a good idea to run your numbers through several of these calculators and compare and contrast the results. By evaluating the results of several calculators, you will get a good idea of what your plan should be. If you still feel uncertain, you might want to meet with a professional financial planner who might be able to work through your individual situation in more detail.
With all that said, a few of the online retirement calculators worth checking out include:
•T. Rowe Price's Retirement Income Calculator. T. Rowe's retirement calculator takes you through all the key areas when it comes to retirement. You indicate the basics like your age and how much you've saved so far. You can then enter how much you're saving each year and indicate how much your employer is helping you save. Next, you input into the calculator how you're invested right now, by telling the calculator how much of your portfolio is in bonds and how much in stocks. You can also indicate if you expect to receive any Social Security benefits, or not.
After entering all the information, the site steps you through a presentation of how you're looking for retirement and if you have enough. If your plan works, good for you. If not, you can then tweak the assumptions until it does.
•Fidelity retirement tools. Fidelity provides a series of four retirement centers on its site, depending on whether you're looking to plan for retirement, getting back on track for planning for retirement, gearing up for your retirement or trying to make your money last through retirement. All these tools are available at Fidelity's Retirement Planning, Guidance, and Tools site.
Fidelity's myPlan Snapshot tool asks just five questions to help you see how retirement is going. You tell the tool how old you are, how much you earn a year, how much you've saved so far and your monthly savings and investment style. The tool then gives you a basic estimate of how much you need to save. Fidelity also offers a tool that helps you design a financial plan that will help you reach multiple financial goals, including retirement.
•Mint.com.Mint.com is best known for helping people track how much they're spending and monitor their financial accounts. But the site also offers a useful retirement planning tool in its "Goals" section. The "Save for Retirement" tool asks you your age, retirement age goal, annual income wanted in retirement and investment style. The tool then gives you a ballpark figure on how much you need to retire. You can then use the site to help you budget money so you can reach your goal. Mint.com is free to use, but you must register first.
•Choose to Save Ballpark Estimate. This tool from the Employee Benefit Research Institute attempts to incorporate several variables you might overlook, including your inflation expectations and any income you might get from pensions.
•USATODAY.com personal financial calculators. USATODAY.com provides a variety of financial tools, including some to help you plan for retirement. All the tools are available at calculators.usatoday.com.
One of the tools in the Retirement pulldown is a Retirement Planner calculator. It requires you to enter your age and other financial basics about yourself. But this tool is useful because you can estimate what you think your investment returns will be ahead of retirement and also in retirement.
But again, as good as some of these tools are, don't rely on just one for something as important as retirement. Use them all and then size up the results next to each other. Doing this should give you a good idea of what you'll need.
Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Follow Matt on Twitter at: twitter.com/mattkrantz
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