Yesterday I was making some modifications to my retirement contributions in my 401k and decided to search for a good retirement calculator that covered all the basics, yet was easy to use. I found a large number of retirement calculators throughout the web, but few covered all the specifics I wanted to make sure were included in my retirement calculation like social security income, increase in income over time, and inflation.
Below are my 2 picks for doing a quick calculation on the age old question, “Do I have enough saved for retirement?”
You can play with each of them, and give yourself a ‘future perspective’ on what you will most likely have in savings during retirement… And, as an added plus, it will take only 5 minutes of your time.
These calculators are for ‘quick’ use, but don’t leave out too many variables. I will use them in the future for quick calculations when I make changes to my savings percentage or my holdings increase/decrease significantly in one calendar year. (to get a ballpark idea on my retirement income.)
Keep in mind that these are not the panacea of retirement calculators. A certified financial adviser will have a much more sophisticated tool to calculate your retirement income, so I highly recommend meeting with one if you desire more concrete formulas and accurate analysis on your current situation. (remember, every situation is different)
The AARP is the premier organization for American retired individuals. Its main focus is to provide services for retired Americans and lobby in Congress in order to protect retired Americans – which essentially means to keep the status quo or improve it for retired individuals.
Their retirement calculator is excellent for a quick look at your estimated savings in retirement.
Benefits Include the Following:
- Takes into account your current Age and Retirement Age
- Takes into account your anticipated Lifestyle after Retirement
- Takes into account Social Security and can estimate it for you
- Takes into account other sources of Income such as an inheritance in retirement
- Includes an easy graph to see the burn-down of your retirement savings during retirement
- Assumptions can also be revised such as the following: rate of return before and after retirement, inflation, yearly increase in salary, income taxes before and after retirement, percentage equated to lifestyle, end of life age.
Negatives Include the Following:
- Doesn’t include a percentage of your chances on getting there. A nice feature that CNNMoney provides.
- Doesn’t include a portfolio selection that matches up you yearly percentage estimates.
Due to the many features that can be adjusted, I was very impressed with the AARP calculator. It is by far the best one I visited because of its many options.
My runner up is CNNMoney’s calculator found at the link above. It too was very easy to use and included many of the same options that AARP’s calculator included.
I was also able to get a simple calculation on my retirement savings in less than 5 minutes – which was one of my top criterias in choosing a retirement calculator.
Benefits Include the Following:
- Takes into account your age at retirement
- Takes into account your annual increase in salary
- Takes into account your desired income in retirement as a percentage or amount
- Includes a company match for your 401k/403b contribution
- Tax rates are adjustable
- A wide range of portfolio types can be selected to match your current investment strategy
- Gives you a nice bar graph and gives you percentages of your chance in reaching your desired savings amount (A nice feature)
Negatives Include the following:
- Can’t change your tax rate in retirement
- Can’t change your investment rate after retirement
- Inflation is locked and can’t be revised
My conclusion is that both are excellent tools. I prefer the AARP tool, because it has a few more options and is slightly easier to use – but you can’t go wrong with the CNNMoney tool as well.
Again, these are just ‘quick tools’, so if you’re looking for a more thorough analysis and expert advice – visit a certified financial adviser.
When have you last checked your retirement savings? Any changes you plan to make?
photo credit: 401(K) 2012