Retirement calculators come in a variety of user-friendly and not-so-user-friendly formats, with varying levels of complexity. Given the variety of differences between the way these calculators look, interact with you, gather information and form a result - it begs the question, which one is the best?
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What Is Your Retirement Calculator Really Telling You?
This can be answered in part by determining what you are specifically hoping to learn, and any characteristics that make your situation unique. However, given the myriad of
factors to be taken into account to create this "future scenario," it could also be deemed a worthy cause to identify and compare the common elements among retirement calculators that can create differences (for better or worse) in the results they produce.
Since we've yet to find a calculator equivalent to a magical crystal ball that can see into your future, the results provided by all the calculators we looked at are driven by a set of assumptions the tool assumes and/or you enter yourself. Based on this underlying principle we determined a set of criteria to help benchmark one against another and find the best retirement calculator.
Our Best of the Best
Read the detailed editorial reviews and individual calculator features for each calculator using the links above, or build your own detailed comparison table. Don't forget to tell us what you think.
Factors That Matter
On our quest to find the best retirement calculators out there we started with basic information and seemingly simple factors such as the transparency of the assumptions and methodology. How clearly does the retirement calculator spell out how it calculates your result and any assumptions it makes along the way?
An example of a couple of factors that may be overlooked by a user if the tool does not point them out - taxes and inflation. Both of these factors will almost certainly impact the dollars in your wallet. Some retirement calculators will assume a rate and apply it for you, savvier calculators may have a rate with standard deviation over time, others will also allow you to configure this yourself to test out the impacts for yourself. And in some cases a calculator will not include inflation and/or tax or only include for specified aspects, leaving any other impacts for you to take into consideration separately.
Ease of Use
Somewhat related to the transparency factor, but worthy of separation, are the different insights and tips offered, and the overall ease of use of the tool. After all, unless you're already a money guru, helpful pointers and insights on what information means is key. And no one has the extra time to waste with frustration or unnecessary efforts, so the easier it is to enter, click and consume, the better.
Rate of Return Methods
Other more potentially complicated elements that vary among calculators are how and what rate of return is calculated for your nest egg's investment porfolio. Is the tool estimating a fixed rate of return that deviates by some percentage on an annual basis? Is this return based on a simulation of past market performance for the specific funds or asset classes you have chosen in your investment mix or what is the logic behind it? Furthermore, is the retirement calculator performing a fixed set of logic or running a Monte Carlo simulation? If it is, how many different random scenarios is it generating and to what confidence level is it telling you that your money will last? These are differences to be aware of when assessing the calculator's result, as a percentage here and there makes a huge difference in the outcome over a period of 30 years or more.
Another aspect that seemed pretty important is how it allows you to input and calculate your future spending. Having a solid handle on your future spending is very important. Understanding all of your discretionary and necessary spending is something that can really help you get comfortable with the range of life possibilities and market circumstances you are ready to take on. We felt like a good, comprehensive style calculator might make it easy to enter this and maybe even prompt you to consider previously unforeseen variables or better understand some of your future expenses that you hadn't wrapped your mind around just yet.
Handling Multiple Income Streams
It should probably do the same type of thing with your current and future income, too, right? Allowing you to enter your income in a customizable way to ensure the cash your reinvesting or covering expenses with is calculated in a manner as accurately as possible. This would include any passive income such as inheritance or maybe income from a temporary second career during retirement. The option to properly include a potential pension or an annuity would be important for those it applies to as well.
We'd be remiss not to mention how important we thought the access to scenario analysis and overall flexibility of the resulting data is key to helping you determine your next step or save to bring to a planner for questions, perhaps explanations. And by 'flexibility' we specifically mean, after all that hard work - what does it actually tell you and what can you do with it? Can you see a year by year detail, and in how much detail? Could you perhaps even download it for future comparison or incorporation into other documents?
Comparing Retirement Calculators
After nailing down what we found important and using calculators from across the web, we selected our favorite calculators based on their inclusion of most or many of the factors outlined and posted their individual features and user-focused reviews to share with you.
The expertise of a trusted financial advisor is always recommended and no one calculator can be counted on for perfect information, however we do hope our investment in time and keystrokes in finding our favorite retirement calculators helps minimize your own efforts. And if you've already put in some keystrokes of your own, please share, we'd like to know what you think as well.