This afternoon, I found myself looking for a Retirement Calculator. All I wanted was a calculator that would allow me to input my age, my planned retirement age, my current savings, the interest rate I expect during my savings and retirement years and finally the amount I will save monthly. The Retirement Calculator should output the amount of income I can expect to withdraw during retirement and have my money last. The first three that popped up on the Google search after the ads were: Vanguard, Bankrate and CNNMoney. Let me explain the Con’s, since there are Con’s it pretty much eliminates the Pro’s. Then i will follow with a calculator I liked that was on page 2 of the search.
1. Vanguard
a. Only allows me to go as low as 60% when stating the percentage my current income I’ll need in retirement. This is such a bad Personal Finance assumption that every financial adviser I have spoken with overstates. I should only need about 30%.
b. Only allows me to input my annual pension from my company as a percentage of my salary at retirement. My pension does not work like that. It is a pretty intense calculation with my income at retirement only counting for part of it.
c. When I added everything other than my pension it spits out a sum that is twice the amount I will really need and then tells me that I have a shortage and need to save more.
2. Bankrate
a. Only allows me to go as low as 40% when stating the percentage my current income I’ll need in retirement.
b. Annual retirement savings can only be inputted as a percentage. So I took the amount I save annually and divided it by the amount my wife and I make yearly and came up with 21%. This amount will go up when we finish paying off our debt.
3. CNNMoney
a. This is actually the worst calculator I have run into. It only asks for current age, retirement age, amount saved so far, current income and savings rate. Then it has the audacity to tell me I am missing the mark by half. This again references what I will need as a percentage of my current income. My current income has nothing to do with what I will need in retirement
Here is the best retirement calculator I have found
The Safe Withdrawal Rate from BIG EARN <<click the blue
This free retirement calculator asks all the right questions but you’ll need to read the series to learn how to use it. The actual calculator link is within the series.
None of the calculators i found seem to include a RMD function for when you hit 70.5, Yes 70.5. When you hit 70.5 years old you are required to begin taking a RMD (required minimum distribution) if you have a IRA, SEP IRA and SIMPLE IRA. This is not required on ROTH IRA. If you want to learn more about RMD‘s you can go to the IRS website and search RMD.
When I first used a retirement calculator it actually scarred me into changing the way I was living. I began paying off my debt. Stopped creating more debt and began saving as much as I could. If you use one and I suggest you do, you should first complete a BUDGET and figure out how much money you will actually need in retirement. If you don’t the amounts they suggest you need might scare you away from even attempting to save for retirement. Whatever you do, I suggest you start saving more now.
Thank you for sharing your time with me,
The Retirement Dude
What should I do if the calculator says, “You can’t get there from here!”
Greg,
Thanks for the comment. I think that you should keep on the path you are on. Pay off your debt and you will be in good shape. Once you are debt free the world will look like a brand new place!
The Retirement Dude