Retirement Calculators: 3 Good Options

The Internet offers many free calculators to baby boomers wanting to get a better handle on whether their retirement finances are on track.

The operative words here are “on track,” because each calculator has strengths and weaknesses.  Calculators aren’t capable of providing a bullet-proof analysis of the complex factors and future unknowns that will determine whether someone has done the planning and saving required to ensure a financially secure retirement.

With that caveat, Squared Away found three calculators, listed below, that do a good job. They met our criteria of being reliable, free, and easy to use.  Many other calculators were quickly eliminated, because they were indecipherable or created issues on the first try.

Most important, each calculator selected covered the assumptions crucial to an accurate analysis. All ask such obvious questions as how much an older worker and spouse (or single person) have saved, their portfolio’s returns, and estimates of their Social Security and pension income.  The first calculator below asks how much money the user wants to leave to his children, and all three include the user’s home equity, a major resource that most retirees are loath to tap but are under increasing financial pressure to consider. Also, the first two ask more detailed questions – and are more time-consuming – than the third, which is the best option if you want just a rough estimate of where you stand.

Finally, this blog’s writer tested each calculator and compared the results with her personal adviser’s customized analysis. Each time, the outcomes were in the same ballpark as the adviser’s.  A fourth good option is to use the calculator provided by the financial company managing your employer’s 401(k) – most of the major providers offer them.

• NewRetirement. Brothers Stephen and Tim Chen designed their new calculator with their mother in mind. Perhaps that’s why their questions are so thorough. The calculator lets users select many of the assumptions that are preset in other calculators, such as how much more pre-retirees anticipate they can save. On the other hand, estimating monthly medical expenses will require some research – but it’s a crucial cost consideration, and the website offers tips. This calculator will satisfy people who aren’t afraid to train a sharper eye on their retirement prospects – a worst-case scenario is presented. The NewRetirement calculator is worth the price of using it: providing an email address.

• E$Planner Basic. This was the top pick in certified financial planner Dana Anspach’s own ranking of retirement calculators. One big reason Anspach said she likes the E$Planner, the creation of Boston University economics professor Laurence Kotlikoff, is that its underlying estimates of retirees’ income taxes are very accurate. It is also unique in asking where its user lives, presumably to more precisely estimate living expenses.  Squared Away found the calculator easy to use, though the written conclusion at the end was a bit cryptic. But overall, it’s a good calculator by a reliable source.

• Target Your Retirement. Full disclosure: this simple calculator was designed at the Center for Retirement Research at Boston College, which sponsors this blog.  It is, hands down, the quickest and easiest to use. We stand by its reliability, because our economists were careful to pick sound assumptions backing up the estimate of boomer’s future retirement income. When the results are presented at the end, users have the option of comparing the added benefits of downsizing to a less-expensive house or using a reverse mortgage to tap home equity.  A bonus with this tool is that it lets the user slide a button from ages 62 to 70 to gauge the beneficial financial impact of working longer, which increases one’s monthly Social Security income and savings.

A calculator is no substitute for a precise and detailed estimate by a financial planner. But it’s important to start somewhere.

Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. To stay current on our blog, please join our free email list. You’ll receive just one email each week – with links to the two new posts for that week – when you sign up here.