Best Retirement Calculators Blog

Recently, I ran across the term “teaser retirement calculator” on a website.  This was the first time I had seen a retirement calculator referred to as a teaser retirement calculator.  On more research of the term and the use of teaser retirement calculators, I believe the majority of the retirement calculators on the Internet fall into the teaser classification.

Most of the retirement calculators on the Internet are not really intended to help you plan your retirement.  They are sales tools for the companies that sponsor them on their websites. The teaser retirement calculator gets your attention (teases you) when you input your retirement numbers and you are alarmed by the calculated results.  This leads you into using the services of the sponsoring site to help you plan for your retirement.

Many of these teaser calculators ask so few questions that they cannot possibly give you an accurate assessment of your retirement plans.  They may not include your spouse’s financial information.  They may not include Social Security which can be an important part of your retirement.  If they do include Social Security, the calculator may make an estimate of your Social Security benefits.  This estimate may be quite inaccurate.

Usually the teaser calculators suggest a percentage of your preretirement income as the estimate of the income you will need in retirement.  This is usually in the 70 – 90% range.   This is considered conventional wisdom by the financial planning industry, but is usually much higher than you will probably need.

Income from a retirement job can have a very positive impact on your retirement finances. I have not seen a teaser retirement calculator ask for income from a retirement job as part of its calculations.

Bottom line…….  Don’t get sucked in by these teaser retirement calculators. Look for the best retirement calculators and spend the time developing and inputting the required data to really evaluate your retirement plans.

As of this date, the best free retirement calculators are:

FIRECalc® Retirement Calculator

Motley Fool Retirement Calculator

Wallet Pop Retirement Calculator

John

My thanks to the author of the www.firecalc.com calculator for showing me where to find the data for calculating retirement living expenses in the US Department of Labor - Bureau of Labor Statistics website.  There are so many different tables in the site that it is difficult to find data that applies to what you are trying to do.

The data from the BLS 2006 results (latest available) shows that a couple’s basic expenses can be 38% of pre-retirement income and the discretionary expenses can be 16% of pre-retirement income for a total of 54%.

This is a far cry from the 75% that many financial planners say is necessary.

I have posted the detail data from the study on the website and classified it by basic and discretionary expense.  I will not debate the classifications.  You can change them as you see fit.  There is an Excel version of the table you can download from the site so you can do your own calculations for your retirement living expenses.

This will take some time to do, but you will find it helpful and revealing.

John Howe

As I researched the best retirement calculators, I realized that I needed to research the best longevity calculators as well.

A key question that all retirement calculators ask is “how long does the money have to last in retirement”.  To properly answer that question, you need to use a longevity calculator to estimate how long you will live.

I studied various longevity calculators and the best one that I found is the Living to 100 Life Expectancy Calculator.  It asks the most detailed questions and it takes the longest to answer. However, it appears to be the most scientific and medically based calculator.

I will continue to evaluate the best retirement calculators after I finish adding the web pages for the best longevity calculators.

You can read my picks for the top longevity calculators at

http://www.best-retirement-calculators.com/Best-Longevity-Calculators.html

If you find a calculator that you think is worthy of mention on this site, please leave me a comment.

Every time I start looking for new retirement calculators on the Internet, I get the feeling that there are more of them than “sand on the seashore or stars in the sky”.

I am studying a few new ones now.  There is a very detailed one on the U. S. Department of Labor site that looks interesting.  The big investment firms T. Rowe Price, Vanguard, and Fidelity have retirement calculators that I will check.  I ran across one yesterday called Firecalc® that bears checking which I will do.

More to come.

The retirement calculator at www.newretirement.com looks like it has potential for being included in the best retirement calculators list. I will test it and see how it stacks up.

As I have contemplated retirement and started planning for it, what I realized was that I did not want my retirement to be the “cold turkey” retirement (stopping all work and sitting in the rocking chair). The more I looked at what I wanted to do, the more interested I became in using the Internet for my retirement.

In the process of doing the planning for my retirement, I was shocked at the amount of money the retirement calculators told me I had to save for a comfortable retirement. This just did not seem correct.

As I researched this problem, I found a study by Merrill Lynch done in 2005. It found that Boomers were not going to be satisfied with the “traditional” retirement and were defining a “new retirement”.

In this “new retirement”, Boomers were not going to retire to the rocking chair, but rather, would work after their formal retirement. This might be part time or full time. It might be periods of work mixed with periods without work. The key point is the income from this work had a significant favorable impact on the retirement finances.

From this study, Merrill Lynch also said,  “Yesterday’s Calculators are Outdated”.

This statement by one of the world’s most respected financial firms led me to research various retirement calculators to find the ones that best reflected the retirement needs for the “new retirement”

This website is the outcome of that research. I also created a retirement calculator for my own use and I share it with readers on this website.

If you use a retirement calculator that you feel meets the needs of the current generation, please submit it to me for evaluation.

John V W Howe

June 7, 2007