You want to plan your retirement, but you are probably having some trouble getting started. Here are 4 reasons why an online retirement calculator is a great way to get off the dime and make a better future for yourself:
1. No Judgements, No Negative Feedback
When you use an online retirement calculator, no one is sitting across the desk from you telling you that you have not saved enough or that you have made terrible investments.
With an online retirement calculator, it is just you and the computer. And while every retirement calculator is different, the best retirement calculators will help educate you on what you really need to think about for a secure retirement.
2. Financial Planners Are Great, But There Are Not Enough of Them and They Might Not Be Right for You
A financial planner can be an excellent resource for retirement planning. You only get one chance to get retirement right and professional advice can give you peace of mind and financial security.
However, there is a real shortage of financial planners and even fewer serving anyone other than the super rich.
According to the CFB Board, today there are fewer than 70,000 Certified Financial Planners (CFPs). And not all of these planners are active and many do not specialize in retirement. However, there are 75 Million Baby Boomers retiring over the next 15-20 years. This translates to maybe only one CFP for every 2,000 people needing retirement planning.
Worse yet, most consumers don’t have enough assets to be of interest to a fee based financial advisor. Many advisors are compensated by earning a fee for managing your money. Typically they make about 1% on the money they manage and expect their clients to have at least $500,000. However, the average boomer only has about $125,000 in their 401K.
Online retirement calculators can be an excellent solution to the financial planner shortage.
3. An Online Retirement Calculator is an Easy Way to Get Started
Online retirement calculators are available anytime / anywhere you have online access. Retirement planning might not be everyone’s favorite activity, but at least online retirement calculators make it easy.
Whether you are in bed, on your lunch hour or sipping coffee on a weekend morning, these retirement online calculators are available to you without an appointment.
Best of all, you can enter your data and then quickly change it to try different scenarios.
4. Online Retirement Calculators Can Cover More Than Investments
Retirement planning is so much more than saving and investing. Retirement planning is more like a complicated puzzle with many different levers – each impacting the other.
- How long will you live?
- How much do you need to spend to be comfortable?
- When do you start Social Security?
- When do you stop working?
- How will your health hold up? And how much will you spend on healthcare?
- What will happen with inflation and the cost of living?
- Is it important to you to leave an estate to heirs?
- What do you value – grandchildren, travel, other — and how does that impact your budget?
- How much time do you have before you retire?
These are just some of the issues that will impact your retirement finances. The best online retirement calculators will draw on expertise addressing all of these questions, in addition to savings and investments.
How to Find the Best Retirement Calculator – Or At Least A Good One
Not all online retirement calculators are created equal. Some will give you useful and reliable results and some are nothing more than a quiz.
Important things to consider when trying to find the best retirement calculator include:
Complexity: How many questions does the calculator ask – does it accurately take stock of:
- All of your accounts
- Your home equity
- Insurance
- You plans for work
- Pensions and Social Security
- Assumptions for inflation and investment returns
- Your own numbers as well as those of your spouse
If you feel that something is missing from the online retirement calculator you are using, then it is probably not a good calculator for you. It can be a good sign if the calculator asks you questions that you might not have considered.
Education: Does the online retirement planning calculator help you to understand retirement planning concepts? Assess whether or not you are learning from the tool. A good tool should teach you.
Actionable: The best retirement planning calculators will also help you take the next step. It is one thing to learn about what you need to do, it is another to actually get started and do it.
The Best Retirement Calculators
There is probably no perfect tool available but there are many online retirement calculators and you should be able to find one that will help you get started. Try a few and learn something from each!
