The Best Retirement Calculator Is Now More Powerful: Better Modeling of Retirement Savings
Considered one of the best retirement calculators, the NewRetirement planning system has been praised by magazines and investing groups. The tool just keeps getting better.
Check out the new features designed to help you plan and have a more secure future.
1. Powerful Savings & Assets Modeling
One of the enhancements that you have asked about the most has been for us to enable a more detailed way for you to model your savings and assets.
You can now document either:
- Your total savings amount
- Total savings by account type (all IRAs or all 401ks, for example)
- Individual savings accounts – enter an unlimited number of individual 401ks, IRAs, Roths and other pre- and after-tax accounts
If you opt to enter each of your individual savings accounts, you will be able to:
- Document existing savings more accurately
- Project potential asset growth with more precision — documenting optimistic and pessimistic rates of return on individual accounts.
- Analyze how different accounts will impact your lifetime goals
- Compare how future contributions toward your savings will impact your wealth — try adding savings to a 401k and then compare how adding those same savings to a Roth IRA has a different impact on your future
Why No Monte Carlo Simulation?
A few of you have requested that we provide Monte Carlo Simulation. Monte Carlo Simulation is a complex method of predicting rates of return — or the likelihood of achieving certain rates of return. The method uses a set of assumptions and standard deviations to predict how investments will perform.
While it is a sophisticated way to predict the future, it is limited, especially when markets are experiencing high highs and low lows. If you have Monte Carlo simulation numbers for your investments, you can enter an optimistic and pessimistic prediction based on that calculation. Or, simply use your own instincts and enter a range that makes sense to you or the history of your investments.
2. Improved Tax Handling
The system will now do a better job of handling future taxes. We updated the underlying financial model so that:
- Starting at age 70.5, the calculator estimates required minimum distributions based on IRS Publication 590-B.
- For PreTax accounts (401ks, IRAs, Other PreTax), contributions reduce your taxable income, returns are not taxed, and all distributions are taxed as income. These accounts are also subject to required minimum distributions.
- For Roth accounts, contributions do not reduce your taxable income since these accounts are funded with after-tax dollars. However, the model assumes no taxes on the growth and distributions from these accounts.
3. Retirement Goals
Having a successful retirement requires two things:
- A Goal
- Knowing what you want to achieve in retirement, taking into consideration what is reasonable and realistic
- A Plan
- A worked-out scheme for achieving the afforementioned goal
This calculator has always enabled you to create a very detailed plan. Our unique approach enables you to add information and play with your data in order to discover your own path to a secure future.
The system now gives you better tools for tracking your retirement financial goals. You can measure how close you are to achieving:
- Adequate retirement income — with both optimistic and pessimistic assumptions: Perhaps the most important goal of retirement planning is to make sure that you have enough income and savings to cover your expenses for as long as you live – no matter how long that turns out to be.
- Any estate planning goals you set — Do you want to leave something for your heirs?
Seeing where you stand in relation to these goals can be a great motivator. And, strengthening your plan to achieve these goals can be easy:
- Adjust your assumptions: Explore the impact of different rates of return on investments, inflation, housing inflation, medical cost inflation and more…
- Tweak your plan: See what happens if you delay retirement, reduce expenses, increase income, save more, tap home equity, etc…
4. More Detailed Income Documentation
You can now more accurately document work and other income sources – even setting your own optimistic and pessimistic growth rates for your compensation.
Add as many variations to your work income as you might anticipate. See what happens if you:
- Retire, but consult part time at your previous employer.
- Retire from your existing job but work full time for a few years.
- Take some time off and then go back and work
You can also input various passive income sources. Passive income streams — income sources that you benefit from without too much effort — are ideal for retirement.
And More Improvements Coming Soon
We are making big changes and minor tweaks all of the time. We really appreciate all the feedback you give us. It enables us to keep building the tool you need for a secure future.