Retirement Calculators: Overview

As Americans began to shoulder more✅ of the responsibility for funding their retirement years, retirement calculators became a popular tool to help people acಌhieve their goals. A Google search for “online retirement calculator” garners tens of thousands of hits.

In this article, we look at two popular retirement calculators available online. They do the best overall job we've seen of translating sophisticated retirement income planning methods into an understandable and easy-to-use planning tool.

How Retirement Calculators Work

If you're going to use a retirement calculator, there are some key facts you'll need to have ready. They include:

• Projected age of retirement
• Annual income
• Any income you expect to have when you retire
• Current retirement savings
• Whether you plan to work during retirement
• Where you plan to live after retiring
• Investment style
• Estimated living expenses
  

Once you plug in this information, the calculator will crunch the number and give you an idea of whether you're on track to meet your goals or which direction you need to take to achieve them.

The most effective and useful calculators let you model various retirement scenario༺s, taking into account the variables that can affect your after-retirement expenses so that you can save and invest accordingly. For example, you can run the numbers based on downsizin🌜g versus staying in your current home.

T. Rowe Price Retirement Income Calculator

The  is widely lauded for its strong emphasis on income planning. You can e🌳stimate your monthly retirement income based on various planning scenarios. It projects your monthly shortfall for each scenario, if any, and shows the likelihood of your savings lasting throughout your retirement. It then offers options for making up for potential shortfalls.

You can compare scenarios side by side while changing the variables and assumptions to see their effect. It also has a built-in 澳洲幸运5官方开奖结果体彩网:Monte Carlo simulation tool to help you see how your retirement savings will fare in various༺ market conditions.

The major drawback is that it calculates only one retirement age at a time. If yo🍃u and y⭕our spouse plan to retire at different points, you need to run two separate calculations.

The presentation is straightforward for t🌌he level of sophistication that the tool employs. The interview process is somewhat involved, but there is plenty of pop-up support along the way.

You can expect to spend up to 20 minutes inputting data if you have all o𝔍f your fina🐟ncial information at hand.

MaxiFi Planner (formerly ESPlanner)

Many retirement calculators do not allow for the varying tax consequences of different sources of income, which can have a significant impact on projecting your retirement income. The accounts for variable taxation, wꦏhich can help you achieve greater tax efficiency using Monte Carlo simulations or other financial models.

It also allows spouses tꦆo plan for two different retirement dates, a notable flaw in the T. Rowe Price calculator.

The first thing you may notice is the detail of the input screens. The added detail ⛄allows for greater flexibility in entering planning assumptions.

The MaxiFi Planner requires some upfront reading to understand the process. You ꧟can choose from several different planning modes, such as Conventional or Economics. It offers two other modes, Upside Investing and Monte Carlo, which you need to purchase.

A self-help guide can be accessed by clicking on any underliဣned word.

MaxiFi has the following noteworthy features:

• It provides separate inputs for the assets of each spouse.
• It assigns a different tax status to each asset, such as after-tax, pre-tax, and no-tax.
• It calculates income taxes automatically based on your data inputs.
• It allows for variable inputs of expenses and income to account for temporary situations or anticipated changes in the future, such as downsizing, the sale of a business, an 澳洲幸运5官方开奖结果体彩网:inheritance, or paying for college.

Once all the assu🌳mptions 𒀰and variables are finalized, the program works with a simple click.

You may find the detailed output a little difficult to understand at first, but it provides several pages of numbers and graphs that are easily clarified. The only real negative is that you have to assume age 100 for 澳洲幸运5官方开奖结果体彩网:life expectancy, and you cannot specify the payout type for a pension, such as single or joint life.𝔉

And, if you don't want to spend a lot of time reading and combing through financial details, MaxiFi may not be for you.

How to Save for Retirement

ꦿOne of the biggest hurdles that most people experience when it comes to saving for retirement is starting the process. But there are certain things you can do that can take the guesswork out of saving.

You can accomplish this by enrolling in programs that allow you⛄ to save using automatic deductions. For instance:

• Enroll in an employer-sponsored plan, such as a 401(k) or 403(b). You choose how much you want to stash into your retirement account. Your employer deducts this amount from your paycheck on a pre-tax basis, if it's a traditional plan. If it's a 澳洲幸运5官方开奖结果体彩网:Roth plan, you pay the taxes up front. Both varieties have tax advantages and, if your employer provides a matching contribution, you get extra money for your retirement fund.
• If you are self-employed, you can opt for an individual retirement account (IRA) and get similar tax benefits to those available through an employer-sponsored 401(k) plan.
• Open an 澳洲幸运5官方开奖结果体彩网:emergency fund. You can choose from a range of options, including 澳洲幸运5官方开奖结果体彩网:savings accounts and short-term certificates deposit (CDs). You can have the money transferred from your 澳洲幸运5官方开奖结果体彩网:checking account automatically each time you get paid. Once you have a high balance, you can earn more by putting the money into investments that yield better returns.

If your age is preventing you from saving for retirement, remember that it's never too late to start. Keep in mind that you'll probably need to save more the later you start.

Consider speaking with a financial professional to help guide you in the right direction. They can assist in choosing the right investment mix to help you meet your goals and stay on track.

The Bottom Line

Online retirement calculators are good tools for estimating how much you need to save tꦓo provide sustainable income for your lifetime. The T. Rowe Price Retirement Income Calculator and MaxiFi Planner are two of the best tools.

It is important to keep in mind that retirement calculators rely on accurate information and realistic assumptions. It's the old software coder's mantra of "garbage in, garbage out."

Before using any planning calculator, plan to have all of your relevant financial﷽ and benefits information on hand and 🥃spend some time thinking about your goals for retirement.