Simple Online Retirement Estimate Calculators
May 7, 2008 – 6:51 amThis post is part 4 in my series on how to estimate your retirement “number”. You can find links to these posts at the bottom of this article.
In this post I’ll be covering some of the more straight-forward retirement calculators that are freely available.
The results provided by online calculators vary greatly, but depending on the inputs can include:
- Whether you’ve saved enough to retire
- How much you need to save to retire
- How much you need in total assets in order to retire
- The probability of out-living your retirement savings
Here’s the key for today: input some reasonable assumptions and determine how much you need have, in dollars, to retire.
Here are the inputs I’ll be using for the various choices:
- Age: 35
- Income: 50,000
- Spouses Income: 0
- Current Retirement Savings: 0
- Expected Inflation: 3%
- Retirement Age: 65
- Years of Retirement Income: 25
- Income Replacement %: 75% ($37,500 annually)
- Percent of salary to save each year: 10%
- Pre-retirement Investment Return: 8%
- Post-retirement Investment Return: 8%
- Marital Status: Married
- Include Social Security: No (to make comparisons easier)
MSN Money Retirement Calculator
Pros: Nice interface, and it shows you in real-time (and in chart form) how various assumption changes affect the result. This is a key capability because you will want to experiment with what-if’s during this process. It also allows you to input the percentage of your income you plan to save each year. I also like that it shows you its own estimate for your social security benefits (even though I didn’t use this option).
Cons: For some reason the web page took quite a while to compute the answer when I tried it.
Results: Savings at retirement: $346,774. Age when savings run out: 77
Pros: Very simple inputs designed to calculate the value of your 401k at retirement. Therefore it doesn’t take taxes or withdrawals into account.
Cons: Too simple. We’re in need of a calculator to tell us how much we need to accumulate, not just how much we will accumulate under perfect circumstances BEFORE we retire.
Results: $590,667 at retirement age (65).
Choose to Save Ballpark Estimate
Pros: Same as the others…mostly ease of use.
Cons: This calculator allows you to input income during retirement, but you have to enter it as future (i.e. inflated) dollars! This is a complicated forecasting and mathematical exercise in and of itself, and is not worth it if all of the other calculator methods are “simple”. The results are not that helpful or insightful either.
Results: I need to save 9.7% of my income each year until retirement. Not very helpful in my opinion.
Bloomberg.com Retirement Planner
Pros: One-page design shows inputs and results side by side including an income and expense graph.
Cons: None
Results: I will have $519,830 at retirement and will spend the last of these funds at age 89 (one year before my forecast passing).
In my next post I will be covering the first of two advanced retirement calculators.
Related Posts:
- Calculating Your Number
- Part 1: Terrible Ways To Figure Out Your Number
- Part 2: Deciding On Your Retirement Goals
- Part 3: Basic Retirement Number Calculations
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