The Vanguard Group, Inc. (2019). Retirement Income Calculator.<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"Welcome back!\u00a0 If you\u2019ve read my blog posts up to this point, you should have a pretty fair idea of your financial fitness for retirement: Do you (or will you) have enough money to retire (see this post); How should you manage your money once you stop working (see this post); When should you begin taking social security retirement benefits (see this post and this one); and How can you protect yourself from things that might go wrong (read this post)? You may have reassured yourself that you\u2019re financially on track, or perhaps you\u2019ve identified some weaknesses in your plan that need shoring up. But how do you know you haven\u2019t made some egregious mistake in your assumptions or calculations? Fear not!\u00a0 Below, I recommend several excellent, free online retirement calculators where you can check your work.\u00a0 (I have no financial or other interest in any of the tools or websites mentioned in this post.) I have not introduced these until now because I think it\u2019s useful for people to do their own analysis first so you know going in what you think is a reasonable financial projection.\u00a0 For those impatient to know the bottom line, my favorite calculators are: the Vanguard Retirement Income Calculator; the T. Rowe Price Retirement Income Calculator; the Fidelity Planning and Guidance Center; and FIRECalc: How Long Will Your Money Last? A Few Words of Caution Some web-based tools are so slick and easy to use that it\u2019s easy to forget that 90% of what\u2019s going on inside the black box is invisible. You\u2019ll likely find that some sites give results consistent with your own analysis, while others are wildly different for reasons that may be mystifying. Figuring out why is akin to debugging a computer program \u2013 except that the fancy behind-the-scenes algorithms are often not explained or documented. Don\u2019t assume that because a calculator has good-looking results (such as colorful graphs and pie charts showing your financial fate) or sounds good (\u201c10,000 simulations are now running to project the probability that your savings will last\u201d) that its output is accurate or means what you think it means. Be skeptical, and compare several calculators\u2019 results against one another and against your own calculations. What Makes a Good Calculator \u2013 My Criteria In my reviews, I favor calculators that are easy to use — and difficult to screw up; whose underlying assumptions and methods are at least somewhat explained; and whose output is clear (often graphical), accurate, and hard to misinterpret. Bonus points are given for a nice interface and educational tips or links. Some calculators are extremely simple and take five minutes to complete, while others are more complex, giving you more flexibility to enter real-life data in which spouses are different ages, retire or start social security at different times, and so forth. Simple is not necessarily worse than complex; it\u2019s hard to make mistakes when you enter only five data points, while a calculator that allows you to enter your own life expectancy or expected rate of return can really get you in trouble if you enter the wrong assumptions. A brief example: One well advertised calculator was nicely laid out, asked lots of detailed questions, and provided helpful educational information and links.\u00a0 However, once I had completed the online questionnaire, the calculator did its magic and, to my surprise, informed me that I would likely run out of money.\u00a0 This was the only calculator out of more than a dozen that gave me this result.\u00a0 How could this be?\u00a0\u00a0 After some puzzlement and study, I finally ferreted out what was going on.\u00a0 The site\u2019s interview asked the user to enter inflation assumptions \u2013 a best case and a worst case over the planning horizon.\u00a0 Later, the program asked the user to enter an optimistic and pessimistic rate of return for the period.\u00a0 While my assumptions seemed reasonable individually, when put together by the calculator, the pessimistic scenario resulted in my losing money (after inflation) every year for 30 years \u2013 a rate of return far worse than anything seen in history! No wonder I was running out of money. For the reasons explained above, I prefer calculators that employ historically derived rates of return, or simply utilize the 4% rule (which is itself historically back-tested), rather than asking the user to enter his or her own guesses on critical assumptions.\u00a0 As a user, you simply don\u2019t have enough information to understand how the program is going to use your inputs.\u00a0 In my opinion, a program that makes it easy to screw up is not well designed, and I downgraded such tools accordingly.\u00a0 Before You Dive In You will save yourself some time if you jot down in advance some key pieces of your financial information (and, if pertinent, that of your spouse or partner): Your expected social security benefit, and the age at which you plan to begin receiving benefits; Any pensions you expect to receive, and the age at which you will start receiving them; Your expected spending in retirement, with and without taxes; Your retirement savings; Your salary (or, if retired, your most recent salary); and The amount you save each year (if you\u2019re not yet retired). A word of caution: pay attention to whether your expected spending and income entries are supposed to be monthly or annual.\u00a0 You will get wildly inaccurate results if you inadvertently enter the wrong one (mea culpa).\u00a0 Also, notice whether the tool you\u2019re using is operating in today\u2019s, current (i.e., uninflated) dollars \u00a0or in future (inflated) dollars.\u00a0 This doesn\u2019t affect your entries (which are generally all in today\u2019s dollars), but makes a huge difference in interpreting the outputs.\u00a0 A dollar of income or assets 30 years from now in future dollars is worth less than 50 cents, while that same amount in today\u2019s dollars is worth the full buck.\u00a0 Simple, easy calculators OK, let\u2019s visit some calculators, starting with a simple one. In general, the retirement calculators that can be done in five minutes or have you answering just a few questions are overly simplistic. They lack the flexibility to allow the user to enter the nuances and complexities that describe most people\u2019s real circumstances. Also, they\u2019re so simple that you really have no idea what the tool is doing and how on or off-point its results may be. One very simple calculator that I do like is Vanguard\u2019s Retirement Income Calculator.\u00a0 This is a good place to dip your toe into the vast ocean of online tools.\u00a0 The Vanguard calculator is clean and straightforward, takes very little time to complete, and has clear graphics illustrating its conclusions.\u00a0 A particularly nifty aspect of this calculator is that it\u2019s all on one page, and you can adjust your inputs and assumptions via sliders and see what the impact is on results.\u00a0 Playing around with these sliders can be quite illuminating.\u00a0 Rather than calculate complicated scenarios or rates of return, the Vanguard calculator uses the 4% rule to determine how much income you can derive from savings \u2013 simple, but quite reasonable.\u00a0 Its shortcomings include a lack of timing flexibility (e.g., taking a pension or Social Security at a different age than you stop working, or couples retiring at different times).\u00a0 If you\u2019re a couple, you\u2019ll need to enter your data lumped together.\u00a0 Also, it\u2019s not clear whether the rate of return on investments you must enter is real (no inflation) or nominal (includes inflation). Half an hour on the phone with Vanguard reps failed to clarify this point. Still, it appears that this entry primarily affects the growth of investments prior to retiring, so if you\u2019re at or close to retirement, this assumption won\u2019t make much difference. Despite a few limitations, this fun tool is definitely worth checking out.\u00a0 A Step Up Another set of calculators takes (a bit) more time and effort to complete, but offers substantially more flexibility to reflect more complicated, real-life circumstances. In many cases, these medium complexity calculators are also far more powerful. My favorite in this category is the T. Rowe Price Retirement Income Calculator. While not all on one page, the T. Rowe Price tool is still quite painless to complete, taking only 10 minutes or so. It allows you to enter your expected social security and pension income, to set and adjust your planning horizon, and to enter separate information about a spouse. It includes a handy worksheet to help you estimate your expenses. This tool offers a significant step up in its modeling sophistication. Instead of assuming a fixed rate of return, or just accepting that a 4% withdrawal rate will work, it uses Monte Carlo analysis to run thousands of possible scenarios (based on historical returns) using the portfolio that you specify. This allows the Retirement Income Calculator to project the probability that your income and savings will be sufficient to see you through your desired time horizon (say, to age 95). As with any calculator that calculates a probability that your money will last through retirement, 90% or 95% confidence is a good target to shoot for; if it says 50%, you may need to think about working longer, trimming expenses, or adjusting in some other way. The T. Rowe Price tool has its limitations.\u00a0 For example, it does not allow you to model complex timing (e.g., you retire at 65, your spouse retires at 62, you take Social Security at 70). \u00a0Still, this straightforward, easy-to-use, yet powerful tool is well worth your time.\u00a0 Try it out! The full meal deal \u2013 complex, powerful calculators The most powerful and flexible calculators, not surprisingly, also take longer to complete. Some complex calculators involve downloading software and\/or paying a user fee. The flexibility of some of these calculators can also get you in trouble, as they allow you to enter assumptions that are unrealistic or don\u2019t work well with other assumptions. Still, I found several excellent calculators in this category that are free, can be completed in 20 minutes or so, and are constructed so as to minimize user error and misinterpretation. As a plus, several of these calculators also have nice educational information and links, allowing you to follow up and learn more about topics that interest you. One calculator I liked was the Fidelity Planning and Guidance Center, which doesn\u2019t sound like a calculator at all.\u00a0 (Don\u2019t confuse it with the Fidelity Retirement Score, which is a much simpler tool.)\u00a0 You don\u2019t have to be a Fidelity customer to use their calculator, but if you are a customer they will import your account data.\u00a0 This tool\u2019s questionnaire allows you to enter your expected social security plans (full retirement age, defer to 70 or whatever you choose), or it will estimate your benefits for you.\u00a0 You can input separate entries for two partners, different retirement dates, different\/multiple pensions, and other special circumstances or one-time events (e.g., realizing profits from downsizing or funding a big wedding).\u00a0 Expenses can be entered via a detailed worksheet or as lump sum expenses.\u00a0 Taxes are estimated separately, which can be confusing.\u00a0 The tool asks whether you have Medigap and Long-term Care Insurance, but doesn\u2019t appear to change your out-year spending if you answer no, which I think is a missed opportunity.\u00a0 (Fidelity has done some good research on health care costs in retirement.) Instead, it reminds you of this \u2018risk\u2019 as it provides results. Like T. Rowe Price, Fidelity\u2019s tool uses Monte Carlo analysis (a paltry 250 iterations, though, compared to T. Rowe Price\u2019s 1,000) to calculate a range of outcomes based on the portfolio you specify. Results are presented graphically, or you can view the underlying yearly numbers. You can choose from average returns, worse than average, or much worse than average; choose much worse than average to see the simulation results at the 90% confidence level \u2013 meaning that 9 out of 10 times, your expected outcome will be at least this good. In sum, this calculator is flexible, powerful, easy to use and hard to…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[16,48,14,47,46,45,5,19],"class_list":["post-521","post","type-post","status-publish","format-standard","hentry","category-retirement-planning","tag-4-rule","tag-financial-independence-early-retirement","tag-financial-planning","tag-fire","tag-monte-carlo-analysis","tag-online-calculators","tag-retirement-planning","tag-william-bengen"],"yoast_head":"\n
Use Online Retirement Calculators to Check Your Work - Retirement Hangout<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/retirementhangout.com\/index.php\/2019\/06\/28\/use-online-retirement-calculators-to-check-your-work\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Use Online Retirement Calculators to Check Your Work - Retirement Hangout\" \/>\n<meta property=\"og:description\" content=\"Welcome back!\u00a0 If you\u2019ve read my blog posts up to this point, you should have a pretty fair idea of your financial fitness for retirement: Do you (or will you) have enough money to retire (see this post); How should you manage your money once you stop working (see this post); When should you begin taking social security retirement benefits (see this post and this one); and How can you protect yourself from things that might go wrong (read this post)? You may have reassured yourself that you\u2019re financially on track, or perhaps you\u2019ve identified some weaknesses in your plan that need shoring up. But how do you know you haven\u2019t made some egregious mistake in your assumptions or calculations? Fear not!\u00a0 Below, I recommend several excellent, free online retirement calculators where you can check your work.\u00a0 (I have no financial or other interest in any of the tools or websites mentioned in this post.) I have not introduced these until now because I think it\u2019s useful for people to do their own analysis first so you know going in what you think is a reasonable financial projection.\u00a0 For those impatient to know the bottom line, my favorite calculators are: the Vanguard Retirement Income Calculator; the T. Rowe Price Retirement Income Calculator; the Fidelity Planning and Guidance Center; and FIRECalc: How Long Will Your Money Last? A Few Words of Caution Some web-based tools are so slick and easy to use that it\u2019s easy to forget that 90% of what\u2019s going on inside the black box is invisible. You\u2019ll likely find that some sites give results consistent with your own analysis, while others are wildly different for reasons that may be mystifying. Figuring out why is akin to debugging a computer program \u2013 except that the fancy behind-the-scenes algorithms are often not explained or documented. Don\u2019t assume that because a calculator has good-looking results (such as colorful graphs and pie charts showing your financial fate) or sounds good (\u201c10,000 simulations are now running to project the probability that your savings will last\u201d) that its output is accurate or means what you think it means. Be skeptical, and compare several calculators\u2019 results against one another and against your own calculations. What Makes a Good Calculator \u2013 My Criteria In my reviews, I favor calculators that are easy to use — and difficult to screw up; whose underlying assumptions and methods are at least somewhat explained; and whose output is clear (often graphical), accurate, and hard to misinterpret. Bonus points are given for a nice interface and educational tips or links. Some calculators are extremely simple and take five minutes to complete, while others are more complex, giving you more flexibility to enter real-life data in which spouses are different ages, retire or start social security at different times, and so forth. Simple is not necessarily worse than complex; it\u2019s hard to make mistakes when you enter only five data points, while a calculator that allows you to enter your own life expectancy or expected rate of return can really get you in trouble if you enter the wrong assumptions. A brief example: One well advertised calculator was nicely laid out, asked lots of detailed questions, and provided helpful educational information and links.\u00a0 However, once I had completed the online questionnaire, the calculator did its magic and, to my surprise, informed me that I would likely run out of money.\u00a0 This was the only calculator out of more than a dozen that gave me this result.\u00a0 How could this be?\u00a0\u00a0 After some puzzlement and study, I finally ferreted out what was going on.\u00a0 The site\u2019s interview asked the user to enter inflation assumptions \u2013 a best case and a worst case over the planning horizon.\u00a0 Later, the program asked the user to enter an optimistic and pessimistic rate of return for the period.\u00a0 While my assumptions seemed reasonable individually, when put together by the calculator, the pessimistic scenario resulted in my losing money (after inflation) every year for 30 years \u2013 a rate of return far worse than anything seen in history! No wonder I was running out of money. For the reasons explained above, I prefer calculators that employ historically derived rates of return, or simply utilize the 4% rule (which is itself historically back-tested), rather than asking the user to enter his or her own guesses on critical assumptions.\u00a0 As a user, you simply don\u2019t have enough information to understand how the program is going to use your inputs.\u00a0 In my opinion, a program that makes it easy to screw up is not well designed, and I downgraded such tools accordingly.\u00a0 Before You Dive In You will save yourself some time if you jot down in advance some key pieces of your financial information (and, if pertinent, that of your spouse or partner): Your expected social security benefit, and the age at which you plan to begin receiving benefits; Any pensions you expect to receive, and the age at which you will start receiving them; Your expected spending in retirement, with and without taxes; Your retirement savings; Your salary (or, if retired, your most recent salary); and The amount you save each year (if you\u2019re not yet retired). A word of caution: pay attention to whether your expected spending and income entries are supposed to be monthly or annual.\u00a0 You will get wildly inaccurate results if you inadvertently enter the wrong one (mea culpa).\u00a0 Also, notice whether the tool you\u2019re using is operating in today\u2019s, current (i.e., uninflated) dollars \u00a0or in future (inflated) dollars.\u00a0 This doesn\u2019t affect your entries (which are generally all in today\u2019s dollars), but makes a huge difference in interpreting the outputs.\u00a0 A dollar of income or assets 30 years from now in future dollars is worth less than 50 cents, while that same amount in today\u2019s dollars is worth the full buck.\u00a0 Simple, easy calculators OK, let\u2019s visit some calculators, starting with a simple one. In general, the retirement calculators that can be done in five minutes or have you answering just a few questions are overly simplistic. They lack the flexibility to allow the user to enter the nuances and complexities that describe most people\u2019s real circumstances. Also, they\u2019re so simple that you really have no idea what the tool is doing and how on or off-point its results may be. One very simple calculator that I do like is Vanguard\u2019s Retirement Income Calculator.\u00a0 This is a good place to dip your toe into the vast ocean of online tools.\u00a0 The Vanguard calculator is clean and straightforward, takes very little time to complete, and has clear graphics illustrating its conclusions.\u00a0 A particularly nifty aspect of this calculator is that it\u2019s all on one page, and you can adjust your inputs and assumptions via sliders and see what the impact is on results.\u00a0 Playing around with these sliders can be quite illuminating.\u00a0 Rather than calculate complicated scenarios or rates of return, the Vanguard calculator uses the 4% rule to determine how much income you can derive from savings \u2013 simple, but quite reasonable.\u00a0 Its shortcomings include a lack of timing flexibility (e.g., taking a pension or Social Security at a different age than you stop working, or couples retiring at different times).\u00a0 If you\u2019re a couple, you\u2019ll need to enter your data lumped together.\u00a0 Also, it\u2019s not clear whether the rate of return on investments you must enter is real (no inflation) or nominal (includes inflation). Half an hour on the phone with Vanguard reps failed to clarify this point. Still, it appears that this entry primarily affects the growth of investments prior to retiring, so if you\u2019re at or close to retirement, this assumption won\u2019t make much difference. Despite a few limitations, this fun tool is definitely worth checking out.\u00a0 A Step Up Another set of calculators takes (a bit) more time and effort to complete, but offers substantially more flexibility to reflect more complicated, real-life circumstances. In many cases, these medium complexity calculators are also far more powerful. My favorite in this category is the T. Rowe Price Retirement Income Calculator. While not all on one page, the T. Rowe Price tool is still quite painless to complete, taking only 10 minutes or so. It allows you to enter your expected social security and pension income, to set and adjust your planning horizon, and to enter separate information about a spouse. It includes a handy worksheet to help you estimate your expenses. This tool offers a significant step up in its modeling sophistication. Instead of assuming a fixed rate of return, or just accepting that a 4% withdrawal rate will work, it uses Monte Carlo analysis to run thousands of possible scenarios (based on historical returns) using the portfolio that you specify. This allows the Retirement Income Calculator to project the probability that your income and savings will be sufficient to see you through your desired time horizon (say, to age 95). As with any calculator that calculates a probability that your money will last through retirement, 90% or 95% confidence is a good target to shoot for; if it says 50%, you may need to think about working longer, trimming expenses, or adjusting in some other way. The T. Rowe Price tool has its limitations.\u00a0 For example, it does not allow you to model complex timing (e.g., you retire at 65, your spouse retires at 62, you take Social Security at 70). \u00a0Still, this straightforward, easy-to-use, yet powerful tool is well worth your time.\u00a0 Try it out! The full meal deal \u2013 complex, powerful calculators The most powerful and flexible calculators, not surprisingly, also take longer to complete. Some complex calculators involve downloading software and\/or paying a user fee. The flexibility of some of these calculators can also get you in trouble, as they allow you to enter assumptions that are unrealistic or don\u2019t work well with other assumptions. Still, I found several excellent calculators in this category that are free, can be completed in 20 minutes or so, and are constructed so as to minimize user error and misinterpretation. As a plus, several of these calculators also have nice educational information and links, allowing you to follow up and learn more about topics that interest you. One calculator I liked was the Fidelity Planning and Guidance Center, which doesn\u2019t sound like a calculator at all.\u00a0 (Don\u2019t confuse it with the Fidelity Retirement Score, which is a much simpler tool.)\u00a0 You don\u2019t have to be a Fidelity customer to use their calculator, but if you are a customer they will import your account data.\u00a0 This tool\u2019s questionnaire allows you to enter your expected social security plans (full retirement age, defer to 70 or whatever you choose), or it will estimate your benefits for you.\u00a0 You can input separate entries for two partners, different retirement dates, different\/multiple pensions, and other special circumstances or one-time events (e.g., realizing profits from downsizing or funding a big wedding).\u00a0 Expenses can be entered via a detailed worksheet or as lump sum expenses.\u00a0 Taxes are estimated separately, which can be confusing.\u00a0 The tool asks whether you have Medigap and Long-term Care Insurance, but doesn\u2019t appear to change your out-year spending if you answer no, which I think is a missed opportunity.\u00a0 (Fidelity has done some good research on health care costs in retirement.) Instead, it reminds you of this \u2018risk\u2019 as it provides results. Like T. Rowe Price, Fidelity\u2019s tool uses Monte Carlo analysis (a paltry 250 iterations, though, compared to T. Rowe Price\u2019s 1,000) to calculate a range of outcomes based on the portfolio you specify. Results are presented graphically, or you can view the underlying yearly numbers. You can choose from average returns, worse than average, or much worse than average; choose much worse than average to see the simulation results at the 90% confidence level \u2013 meaning that 9 out of 10 times, your expected outcome will be at least this good. In sum, this calculator is flexible, powerful, easy to use and hard to...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/retirementhangout.com\/index.php\/2019\/06\/28\/use-online-retirement-calculators-to-check-your-work\/\" \/>\n<meta property=\"og:site_name\" content=\"Retirement Hangout\" \/>\n<meta property=\"article:published_time\" content=\"2019-06-28T23:15:43+00:00\" \/>\n<meta property=\"og:image\" content=\"http:\/\/retirementhangout.com\/wp-content\/uploads\/2019\/06\/Retirement-Graph.png\" \/>\n<meta name=\"author\" content=\"Hangout Host\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Hangout Host\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"13 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/retirementhangout.com\\\/index.php\\\/2019\\\/06\\\/28\\\/use-online-retirement-calculators-to-check-your-work\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/retirementhangout.com\\\/index.php\\\/2019\\\/06\\\/28\\\/use-online-retirement-calculators-to-check-your-work\\\/\"},\"author\":{\"name\":\"Hangout Host\",\"@id\":\"https:\\\/\\\/retirementhangout.com\\\/#\\\/schema\\\/person\\\/8c4ae01981f8f32c14283392437fea2a\"},\"headline\":\"Use Online Retirement Calculators to Check Your Work\",\"datePublished\":\"2019-06-28T23:15:43+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/retirementhangout.com\\\/index.php\\\/2019\\\/06\\\/28\\\/use-online-retirement-calculators-to-check-your-work\\\/\"},\"wordCount\":2594,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/retirementhangout.com\\\/#\\\/schema\\\/person\\\/8c4ae01981f8f32c14283392437fea2a\"},\"image\":{\"@id\":\"https:\\\/\\\/retirementhangout.com\\\/index.php\\\/2019\\\/06\\\/28\\\/use-online-retirement-calculators-to-check-your-work\\\/#primaryimage\"},\"thumbnailUrl\":\"http:\\\/\\\/retirementhangout.com\\\/wp-content\\\/uploads\\\/2019\\\/06\\\/Retirement-Graph.png\",\"keywords\":[\"4% Rule\",\"financial independence early retirement\",\"financial planning\",\"FIRE\",\"Monte Carlo Analysis\",\"online calculators\",\"Retirement planning\",\"William Bengen\"],\"articleSection\":[\"Retirement planning\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/retirementhangout.com\\\/index.php\\\/2019\\\/06\\\/28\\\/use-online-retirement-calculators-to-check-your-work\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/retirementhangout.com\\\/index.php\\\/2019\\\/06\\\/28\\\/use-online-retirement-calculators-to-check-your-work\\\/\",\"url\":\"https:\\\/\\\/retirementhangout.com\\\/index.php\\\/2019\\\/06\\\/28\\\/use-online-retirement-calculators-to-check-your-work\\\/\",\"name\":\"Use Online Retirement Calculators to Check Your Work - 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Retirement Hangout","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/retirementhangout.com\/index.php\/2019\/06\/28\/use-online-retirement-calculators-to-check-your-work\/","og_locale":"en_US","og_type":"article","og_title":"Use Online Retirement Calculators to Check Your Work - Retirement Hangout","og_description":"Welcome back!\u00a0 If you\u2019ve read my blog posts up to this point, you should have a pretty fair idea of your financial fitness for retirement: Do you (or will you) have enough money to retire (see this post); How should you manage your money once you stop working (see this post); When should you begin taking social security retirement benefits (see this post and this one); and How can you protect yourself from things that might go wrong (read this post)? You may have reassured yourself that you\u2019re financially on track, or perhaps you\u2019ve identified some weaknesses in your plan that need shoring up. But how do you know you haven\u2019t made some egregious mistake in your assumptions or calculations? Fear not!\u00a0 Below, I recommend several excellent, free online retirement calculators where you can check your work.\u00a0 (I have no financial or other interest in any of the tools or websites mentioned in this post.) I have not introduced these until now because I think it\u2019s useful for people to do their own analysis first so you know going in what you think is a reasonable financial projection.\u00a0 For those impatient to know the bottom line, my favorite calculators are: the Vanguard Retirement Income Calculator; the T. Rowe Price Retirement Income Calculator; the Fidelity Planning and Guidance Center; and FIRECalc: How Long Will Your Money Last? A Few Words of Caution Some web-based tools are so slick and easy to use that it\u2019s easy to forget that 90% of what\u2019s going on inside the black box is invisible. You\u2019ll likely find that some sites give results consistent with your own analysis, while others are wildly different for reasons that may be mystifying. Figuring out why is akin to debugging a computer program \u2013 except that the fancy behind-the-scenes algorithms are often not explained or documented. Don\u2019t assume that because a calculator has good-looking results (such as colorful graphs and pie charts showing your financial fate) or sounds good (\u201c10,000 simulations are now running to project the probability that your savings will last\u201d) that its output is accurate or means what you think it means. Be skeptical, and compare several calculators\u2019 results against one another and against your own calculations. What Makes a Good Calculator \u2013 My Criteria In my reviews, I favor calculators that are easy to use — and difficult to screw up; whose underlying assumptions and methods are at least somewhat explained; and whose output is clear (often graphical), accurate, and hard to misinterpret. Bonus points are given for a nice interface and educational tips or links. Some calculators are extremely simple and take five minutes to complete, while others are more complex, giving you more flexibility to enter real-life data in which spouses are different ages, retire or start social security at different times, and so forth. Simple is not necessarily worse than complex; it\u2019s hard to make mistakes when you enter only five data points, while a calculator that allows you to enter your own life expectancy or expected rate of return can really get you in trouble if you enter the wrong assumptions. A brief example: One well advertised calculator was nicely laid out, asked lots of detailed questions, and provided helpful educational information and links.\u00a0 However, once I had completed the online questionnaire, the calculator did its magic and, to my surprise, informed me that I would likely run out of money.\u00a0 This was the only calculator out of more than a dozen that gave me this result.\u00a0 How could this be?\u00a0\u00a0 After some puzzlement and study, I finally ferreted out what was going on.\u00a0 The site\u2019s interview asked the user to enter inflation assumptions \u2013 a best case and a worst case over the planning horizon.\u00a0 Later, the program asked the user to enter an optimistic and pessimistic rate of return for the period.\u00a0 While my assumptions seemed reasonable individually, when put together by the calculator, the pessimistic scenario resulted in my losing money (after inflation) every year for 30 years \u2013 a rate of return far worse than anything seen in history! No wonder I was running out of money. For the reasons explained above, I prefer calculators that employ historically derived rates of return, or simply utilize the 4% rule (which is itself historically back-tested), rather than asking the user to enter his or her own guesses on critical assumptions.\u00a0 As a user, you simply don\u2019t have enough information to understand how the program is going to use your inputs.\u00a0 In my opinion, a program that makes it easy to screw up is not well designed, and I downgraded such tools accordingly.\u00a0 Before You Dive In You will save yourself some time if you jot down in advance some key pieces of your financial information (and, if pertinent, that of your spouse or partner): Your expected social security benefit, and the age at which you plan to begin receiving benefits; Any pensions you expect to receive, and the age at which you will start receiving them; Your expected spending in retirement, with and without taxes; Your retirement savings; Your salary (or, if retired, your most recent salary); and The amount you save each year (if you\u2019re not yet retired). A word of caution: pay attention to whether your expected spending and income entries are supposed to be monthly or annual.\u00a0 You will get wildly inaccurate results if you inadvertently enter the wrong one (mea culpa).\u00a0 Also, notice whether the tool you\u2019re using is operating in today\u2019s, current (i.e., uninflated) dollars \u00a0or in future (inflated) dollars.\u00a0 This doesn\u2019t affect your entries (which are generally all in today\u2019s dollars), but makes a huge difference in interpreting the outputs.\u00a0 A dollar of income or assets 30 years from now in future dollars is worth less than 50 cents, while that same amount in today\u2019s dollars is worth the full buck.\u00a0 Simple, easy calculators OK, let\u2019s visit some calculators, starting with a simple one. In general, the retirement calculators that can be done in five minutes or have you answering just a few questions are overly simplistic. They lack the flexibility to allow the user to enter the nuances and complexities that describe most people\u2019s real circumstances. Also, they\u2019re so simple that you really have no idea what the tool is doing and how on or off-point its results may be. One very simple calculator that I do like is Vanguard\u2019s Retirement Income Calculator.\u00a0 This is a good place to dip your toe into the vast ocean of online tools.\u00a0 The Vanguard calculator is clean and straightforward, takes very little time to complete, and has clear graphics illustrating its conclusions.\u00a0 A particularly nifty aspect of this calculator is that it\u2019s all on one page, and you can adjust your inputs and assumptions via sliders and see what the impact is on results.\u00a0 Playing around with these sliders can be quite illuminating.\u00a0 Rather than calculate complicated scenarios or rates of return, the Vanguard calculator uses the 4% rule to determine how much income you can derive from savings \u2013 simple, but quite reasonable.\u00a0 Its shortcomings include a lack of timing flexibility (e.g., taking a pension or Social Security at a different age than you stop working, or couples retiring at different times).\u00a0 If you\u2019re a couple, you\u2019ll need to enter your data lumped together.\u00a0 Also, it\u2019s not clear whether the rate of return on investments you must enter is real (no inflation) or nominal (includes inflation). Half an hour on the phone with Vanguard reps failed to clarify this point. Still, it appears that this entry primarily affects the growth of investments prior to retiring, so if you\u2019re at or close to retirement, this assumption won\u2019t make much difference. Despite a few limitations, this fun tool is definitely worth checking out.\u00a0 A Step Up Another set of calculators takes (a bit) more time and effort to complete, but offers substantially more flexibility to reflect more complicated, real-life circumstances. In many cases, these medium complexity calculators are also far more powerful. My favorite in this category is the T. Rowe Price Retirement Income Calculator. While not all on one page, the T. Rowe Price tool is still quite painless to complete, taking only 10 minutes or so. It allows you to enter your expected social security and pension income, to set and adjust your planning horizon, and to enter separate information about a spouse. It includes a handy worksheet to help you estimate your expenses. This tool offers a significant step up in its modeling sophistication. Instead of assuming a fixed rate of return, or just accepting that a 4% withdrawal rate will work, it uses Monte Carlo analysis to run thousands of possible scenarios (based on historical returns) using the portfolio that you specify. This allows the Retirement Income Calculator to project the probability that your income and savings will be sufficient to see you through your desired time horizon (say, to age 95). As with any calculator that calculates a probability that your money will last through retirement, 90% or 95% confidence is a good target to shoot for; if it says 50%, you may need to think about working longer, trimming expenses, or adjusting in some other way. The T. Rowe Price tool has its limitations.\u00a0 For example, it does not allow you to model complex timing (e.g., you retire at 65, your spouse retires at 62, you take Social Security at 70). \u00a0Still, this straightforward, easy-to-use, yet powerful tool is well worth your time.\u00a0 Try it out! The full meal deal \u2013 complex, powerful calculators The most powerful and flexible calculators, not surprisingly, also take longer to complete. Some complex calculators involve downloading software and\/or paying a user fee. The flexibility of some of these calculators can also get you in trouble, as they allow you to enter assumptions that are unrealistic or don\u2019t work well with other assumptions. Still, I found several excellent calculators in this category that are free, can be completed in 20 minutes or so, and are constructed so as to minimize user error and misinterpretation. As a plus, several of these calculators also have nice educational information and links, allowing you to follow up and learn more about topics that interest you. One calculator I liked was the Fidelity Planning and Guidance Center, which doesn\u2019t sound like a calculator at all.\u00a0 (Don\u2019t confuse it with the Fidelity Retirement Score, which is a much simpler tool.)\u00a0 You don\u2019t have to be a Fidelity customer to use their calculator, but if you are a customer they will import your account data.\u00a0 This tool\u2019s questionnaire allows you to enter your expected social security plans (full retirement age, defer to 70 or whatever you choose), or it will estimate your benefits for you.\u00a0 You can input separate entries for two partners, different retirement dates, different\/multiple pensions, and other special circumstances or one-time events (e.g., realizing profits from downsizing or funding a big wedding).\u00a0 Expenses can be entered via a detailed worksheet or as lump sum expenses.\u00a0 Taxes are estimated separately, which can be confusing.\u00a0 The tool asks whether you have Medigap and Long-term Care Insurance, but doesn\u2019t appear to change your out-year spending if you answer no, which I think is a missed opportunity.\u00a0 (Fidelity has done some good research on health care costs in retirement.) Instead, it reminds you of this \u2018risk\u2019 as it provides results. Like T. Rowe Price, Fidelity\u2019s tool uses Monte Carlo analysis (a paltry 250 iterations, though, compared to T. Rowe Price\u2019s 1,000) to calculate a range of outcomes based on the portfolio you specify. Results are presented graphically, or you can view the underlying yearly numbers. You can choose from average returns, worse than average, or much worse than average; choose much worse than average to see the simulation results at the 90% confidence level \u2013 meaning that 9 out of 10 times, your expected outcome will be at least this good. In sum, this calculator is flexible, powerful, easy to use and hard to...","og_url":"https:\/\/retirementhangout.com\/index.php\/2019\/06\/28\/use-online-retirement-calculators-to-check-your-work\/","og_site_name":"Retirement Hangout","article_published_time":"2019-06-28T23:15:43+00:00","og_image":[{"url":"http:\/\/retirementhangout.com\/wp-content\/uploads\/2019\/06\/Retirement-Graph.png","type":"","width":"","height":""}],"author":"Hangout Host","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Hangout Host","Est. reading time":"13 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/retirementhangout.com\/index.php\/2019\/06\/28\/use-online-retirement-calculators-to-check-your-work\/#article","isPartOf":{"@id":"https:\/\/retirementhangout.com\/index.php\/2019\/06\/28\/use-online-retirement-calculators-to-check-your-work\/"},"author":{"name":"Hangout Host","@id":"https:\/\/retirementhangout.com\/#\/schema\/person\/8c4ae01981f8f32c14283392437fea2a"},"headline":"Use Online Retirement Calculators to Check Your Work","datePublished":"2019-06-28T23:15:43+00:00","mainEntityOfPage":{"@id":"https:\/\/retirementhangout.com\/index.php\/2019\/06\/28\/use-online-retirement-calculators-to-check-your-work\/"},"wordCount":2594,"commentCount":0,"publisher":{"@id":"https:\/\/retirementhangout.com\/#\/schema\/person\/8c4ae01981f8f32c14283392437fea2a"},"image":{"@id":"https:\/\/retirementhangout.com\/index.php\/2019\/06\/28\/use-online-retirement-calculators-to-check-your-work\/#primaryimage"},"thumbnailUrl":"http:\/\/retirementhangout.com\/wp-content\/uploads\/2019\/06\/Retirement-Graph.png","keywords":["4% Rule","financial independence early retirement","financial planning","FIRE","Monte Carlo Analysis","online calculators","Retirement planning","William Bengen"],"articleSection":["Retirement planning"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/retirementhangout.com\/index.php\/2019\/06\/28\/use-online-retirement-calculators-to-check-your-work\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/retirementhangout.com\/index.php\/2019\/06\/28\/use-online-retirement-calculators-to-check-your-work\/","url":"https:\/\/retirementhangout.com\/index.php\/2019\/06\/28\/use-online-retirement-calculators-to-check-your-work\/","name":"Use Online Retirement Calculators to Check Your Work - 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