Online Retirement Calculators: More Harm Than Help?

If you care about online retirement calculators more, this guide gets straight to the point. We break down what actually matters, skip the fluff, and show you how to put it to work today.

Key Takeaways

• SharePinTweetShare0 SharesPeople frequently ask me to point them to a decent online retirement planning calculator.
• You see, I don’t trust such calculators.
• You Know What They Say about Assuming… For instance, what rate of return does the calculator assume for your portfolio?
• And what assumptions does the calculator make about future tax rates?

Common Mistakes to Avoid

It’s not that their math is wrong. (At least, not typically.) The problem is that their calculations are frequently based on shoddy assumptions and unknowable variables. Worth noting: or, perhaps, was the calculator programmed to assume that future returns will equal past returns (thereby ignoring the possibility that the U.S. economy won’t have the same explosive growth over the next century that it did over the last)?

From what I’ve seen, most calculators assume that either: All income will be taxed at a flat rate (typically 25% or 28%), or Tax brackets will continue to look the same as the 2013 tax brackets all the method into the future. While I certainly don’t know what tax rates will look like three decades from now, I doubt that either of one of those assumptions will turn out to be correct.

Is Online Retirement Calculators More Worth It?

More importantly, and does the calculator account for sequence of returns risk? A portfolio averaging a 5% annual return is highly different from earning a 5% return each year.

If the calculator doesn’t account for that fact, it’s going to significantly underestimate the amount of money you’ll require to retire safely. What’s Better than an Online Calculator?

Where the Real Savings Hide

Remember that if you’ve taken the time to educate yourself about investing, then you probably don’t require an online calculator. A straightforward excel spreadsheet will function at least as well. (And you get to pick your own assumptions!) Alternatively, if you haven’t taken the time to learn about investing, there’s no method for you to judge whether the assumptions that went into the calculator’s projections are reasonable.

In other words, there are two routes you can take: If you wish to be a do-it-yourself investor, super. But rather than rely on online calculators, you’ll require a deeper level of understanding if you wish to be successful.

A Closer Look at Online Retirement Calculators More

As a rule, if you don’t wish to go it alone, that’s fine too. But in that case, an online calculator isn’t what you require.

What you require is a qualified financial advisor. In my opinion, such calculators are only useful for young investors who are so far away from retirement that none of the relevant variables are known yet.

What to Know About Online Retirement Calculators More

In short, in other words, a completely blind guess from a calculator is almost as solid as one from an advisor. About the Author: Mike Piper writes at Oblivious Investor, where he provides plain-English explanations of topics like Roth IRA rules and 401k rollovers.

How To Get Free Financial Assist OnlineI’ve talked a lot over at One Money Design about my personal experience as a Money Map Coach and frequently share how this FREE program… Purchasing Online To Avoid Sales Tax, And Not Paying Apply Tax? Congress May End That SoonA lot of people purchase aspects online to avoid having to pay sales tax.

How Online Retirement Calculators More Really Works

Worth noting: congress may soon be making changes requiring online retailers to collect… Are You On Track For Retirement? Betterment RetireGuide™ Will Assist You Figure It OutBetterment's RetireGuide™ tool makes it straightforward and efficient to see just how much you're going to require to save for retirement.

Are you on track?

Frequently Asked Questions

How can I save money on online retirement calculators more?

Compare prices across a few retailers, look for active coupon codes, and time bigger buys around sales events. Worth noting: or, perhaps, was the calculator programmed to assume that future returns will equal past returns (thereby ignoring the possibility that the U.S. economy won’t have the same explosive growth over the next ce....

Is it worth shopping around for online retirement calculators more?

Usually yes. From what I’ve seen, most calculators assume that either: All income will be taxed at a flat rate (typically 25% or 28%), or Tax brackets will continue to look the same as the 2013 tax brackets all the method into the fu....

Smart Ways to Save More on Online Retirement Calculators More

• Check for student, military, or first order offers you may qualify for.
• Time non urgent purchases around major sale events for the deepest cuts.
• Leave items in your cart for a day; some stores send a follow up discount.
• Pair cashback with a coupon so you save twice on the same order.
• Stack a coupon code with an existing sale whenever the store allows it.

Final Thoughts

The bottom line on online retirement calculators more: a little research goes a long way. Compare your options, watch for seasonal offers, and never pay full price when a better deal is a click away.

Originally published at biblemoneymatters.com.